Employee approval of CEOs and firm value: Evidence from Employees' choice awards |
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| Institution: | 1. Department of Economics and Finance, Woody L. Hunt College of Business, The University of Texas at El Paso, 500 W. University Ave., El Paso, TX 79968, United States of America;2. Department of Finance, College of Business, Florida State University, United States of America;1. Shenzhen Audencia Financial Technology Institute, Shenzhen University, 3688 Nanhai Avenue, Nanshan District, Shenzhen, China;2. Monash Business School, Monash University, Wellington Rd, Clayton, VIC 3800, Australia;3. School of Business and Creative Industries, University of Sunshine Coast, 90 Sippy Downs Dr, Sippy Downs, QLD 4556, Australia;4. Adelaide Business School, Adelaide University, Adelaide, SA 5005, Australia;1. University of Sheffield, United Kingdom;2. University of Edinburgh, United Kingdom;1. College of Business, Central Washington University, 400 E University Way, Ellensburg, WA 98926, United States of America;2. Robert C. Vackar College of Business and Entrepreneurship, The University of Texas Rio Grande Valley, 1201 W University Dr, Edinburg, TX 78539, United States of America |
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| Abstract: | Using Glassdoor's list of “Top CEOs by Employees' Choice,” we adopt a regression discontinuity (RD) specification to establish a causal link between the employee approval of CEOs and firm value. Having a CEO included in the top list results in an increase in firm performance in both stock returns and return on assets. Having a top CEO significantly increases a firm's employee efficiency, attraction to future employees, hiring of high-quality laborers such as inventors, and attraction to the customers. Our findings establish that the CEO-employee relationship is an important, though intangible, component of a corporation, and we emphasize the critical role of perceived corporate culture in the spirit of Guiso et al. (2015). |
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