Working Paper: NBER ID: w23248
Authors: Oriana Bandiera; Stephen Hansen; Andrea Prat; Raffaella Sadun
Abstract: We measure the behavior of 1,114 CEOs in six countries parsing granular CEO diary data through an unsupervised machine learning algorithm. The algorithm uncovers two distinct behavioral types: “leaders” and “managers”. Leaders focus on multi-function, high-level meetings, while managers focus on one-to-one meetings with core functions. Firms with leader CEOs are on average more productive, and this difference arises only after the CEO is hired. The data is consistent with horizontal differentiation of CEO behavioral types, and firm-CEO matching frictions. We estimate that 17% of sample CEOs are mismatched, and that mismatches are associated with significant productivity losses.
Keywords: CEO behavior; firm performance; productivity; management practices
JEL Codes: J22; J24; M12; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| leader CEOs (M12) | firm productivity (D22) |
| mismatched CEOs (M12) | productivity losses (J17) |
| CEO behavior (M12) | productivity difference after appointment (J29) |
| firm heterogeneity (D21) | CEO behavior impact (M12) |
| CEO behavior index (M12) | firm performance (L25) |