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A note on assessing the relation between CEO characteristics and stock performance: A lpha A bove R eplacement
Author(s) -
Olsen Brett C.,
Sisodiya Sanjay R.,
Swisher Judith
Publication year - 2016
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12095
Subject(s) - stock (firearms) , equity (law) , econometrics , business , accounting , business administration , mathematics , engineering , political science , mechanical engineering , law
Many studies examine the relation between stock performance and CEO characteristics. We approach the topic in a different way, using the alphas generated by the F ama‐ F rench three‐factor model as the dependent variable in a CEO characteristic model. We find several traits are significantly related to alpha. CEO s who are younger, own a larger fraction of firm equity and hold a graduate degree provide greater alphas. CEO s who are also the founder of the firm deliver larger alphas. Our results provide useful information for boards assessing the performance of CEO s and considering CEO succession.