تایید شخص ثالث کیفیت CEO، اختیارات مدیریت و واکنش های ذینفعان

Research on the influence of third-party endorsements of CEO quality generally does not account for the context in which such signs manifest. To address this limitation, the present study examines how a CEO's level of managerial discretion shapes boards' and shareholders' responses to external endorsements of his or her quality. Managerial discretion refers to the range of strategic options that executives have at their disposal in a given business context. The findings indicate that boards only react to CEO endorsements in high-discretion settings, and this reaction is positive (i.e., more pay). In contrast, shareholders – regardless of discretion levels – positively respond to CEO endorsements in the short-term, while these responses become more equivocal over the time. These results suggest that – at least in the short term – directors more adeptly interpret and respond to external information about CEO quality than shareholders.

Evaluating a CEO's quality is a crucial task for a firm's board of directors and shareholders. CEO quality, however, is sometimes difficult to interpret, since local management decisions are but one of many factors that influence firm performance. Various systematic risk factors at the industry and firm level (Holmstrom, 1982) – such as sunk costs, imperfect information, and internal politics (Hannan & Freeman, 1984) – also affect firm outcomes. CEOs themselves may further complicate boards' and shareholders' evaluations of their quality by attempting to manipulate those entities' perceptions (Bettman & Weitz, 1983). Given this evaluative uncertainty, we ask, how do boards and shareholders make sense of CEO quality?

Tables A.1 (high-discretion firms) and A.2 (low-discretion firms) show the means and correlations for the analyzed variables. Table A.3 reports the means for low- and high-discretion firms with medal and non-medal winning executives. Table A.4 summarizes the analysis of Hypothesis 1A, which proposes that third-party endorsements of CEO quality positively influence the short-term share prices of high-discretion – but not low-discretion – firms. Models 1 and 2 in Table A.4 respectively show the results of the event studies for high- and low-discretion firms. These results reveal that the returns during the three days prior to the award announcement do not significantly differ from a firm's historical relationship to the market in either discretion context, which suggests that the news of the award did not leak prior to the announcement date. The cumulative excess returns from day 0 to 1, day 0 to 2 and day 0 to 3 are all positive and significant for both high- and low-discretion firms. Models 1 and 2 in Table A.4 communicate that a CEO's endorsement produces an uptick in his or her firm's stock price – ranging from 0.42% to 1.16% – in the days immediately following the award announcement. The immediate, positive effect of winning a medal in both discretion contexts does not support Hypothesis 1A. Interestingly, the short-term increase in stock price from winning a medal is greater among the low-discretion firms for all three measured periods.