How CEO/CMO characteristics affect innovation and stock returns: findings and future directions
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REVIEW PAPER
How CEO/CMO characteristics affect innovation and stock returns: findings and future directions Ya You 1
&
Shuba Srinivasan 2 & Koen Pauwels 3,4 & Amit Joshi 5
Received: 31 August 2018 / Accepted: 6 May 2020 # Academy of Marketing Science 2020
Abstract Investor stock market response has received a great deal of attention in the marketing literature. However, firms are not faceless corporations; individuals such as CEOs set their strategies. Upper echelon and strategic leadership theories hold that chosen strategies derive from these individuals’ opinions, which are a function of their personalities, demographics, experiences, and values. Building on recent literature, the authors propose how CEO characteristics can influence innovation and stock returns. Investors are motivated by cash flow expectations—in particular, the prospect of increasing and accelerating future cash flows, reducing associated risks, and increasing residual value. This systematic review focuses on four main characteristics—personality, demographics, experience and compensation—to arrive at a set of propositions on innovation and stock returns. After reviewing the extensive literature on CEO characteristics, the authors outline the emerging findings on CMO characteristics; propose future research directions on CEO and CMO characteristics, innovations, and stock returns; and offer implications for practice. Keywords Stock returns . CEO . CMO . Personality . Demographics . Experience . Compensation . Innovation
Introduction All authors contributed equally and are listed in reverse alphabetical order. John Hulland and Mark Houston served as editors for this article. Electronic supplementary material The online version of this article (https://doi.org/10.1007/s11747-020-00732-4) contains supplementary material, which is available to authorized users. * Ya You [email protected] Shuba Srinivasan [email protected] Koen Pauwels [email protected] Amit Joshi [email protected] 1
College of Business and Economics, California State University, East Bay, 25800 Carlos Bee Boulevard, Hayward, CA 94542, USA
2
Marketing Department, Boston University Questrom School of Business, 595 Commonwealth Avenue, Boston, MA, USA
3
D’Amore-McKim School of Business, Northeastern University, Boston, MA 02115, USA
4
BI Norwegian Business School, Oslo, Norway
5
IMD, Lausanne, Switzerland
A small group of executives at the top of an organization (i.e., the top management team [TMT]1) can dramatically affect firm outcomes (Kashmiri and Mahajan 2017; Nath and Bharadwaj 2020; Srinivasan and Hanssens 2009). A firm’s CEO determines many strategic firm decisions, including major market entry and exit, innovations, and resource allocations (Brower and Nath 2018; Hambrick and Mason 1984; Kashmiri et al. 2017). Ample managerial evidence shows that the trajectories and fortunes of companies are traceable to the actions (or inaction) of their top executives. This intuition is formalized in the upper echelon theory in management (Hambrick 2007; Hambrick
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