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Competing with Superstars


Ammann, Manuel; Horsch, Philipp; Oesch, David (2016). Competing with Superstars. Management Science, 62(10):2842-2858.

Abstract

This paper investigates the effect of superstar chief executive officers (CEOs) on their competitors. Exploiting shocks to CEO status due to prestigious media awards, we document a significant positive stock market performance of competitors of superstar CEOs subsequent to the award. The effect is more pronounced for competitors who have not received an award themselves, who are geographically close to an award winner, and who are not entrenched. We observe an increase in risk taking, operating performance, and innovation activity of superstars’ competitors as potential channels for this positive performance. Our results suggest a positive overall welfare impact of corporate superstar systems due to the incentivizing effect on superstars’ competitors.

Abstract

This paper investigates the effect of superstar chief executive officers (CEOs) on their competitors. Exploiting shocks to CEO status due to prestigious media awards, we document a significant positive stock market performance of competitors of superstar CEOs subsequent to the award. The effect is more pronounced for competitors who have not received an award themselves, who are geographically close to an award winner, and who are not entrenched. We observe an increase in risk taking, operating performance, and innovation activity of superstars’ competitors as potential channels for this positive performance. Our results suggest a positive overall welfare impact of corporate superstar systems due to the incentivizing effect on superstars’ competitors.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:2016
Deposited On:15 Mar 2017 11:31
Last Modified:15 Mar 2017 11:32
Publisher:Institute for Operations Research and the Management Science
ISSN:0025-1909
Publisher DOI:https://doi.org/10.1287/mnsc.2015.2266
Other Identification Number:merlin-id:14675

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