Ceo Behavior and Firm Performance

Oriana Bandiera (LSE)
Stephen Hansen (Oxford)
Andrea Prat (Columbia)
Raffaella Sadun (Harvard)

Abstract: We measure the behavior of 1,114 CEOs in six countries parsing granular CEO diary data through an unsupervised machine learning algorithm. The algorithm uncovers two distinct behavioral types: “leaders” and “managers”. Leaders focus on multi-function, high-level meetings, while managers focus on one-to-one meetings with core functions. Firms with leader CEOs are on average more productive, and this di↵erence arises only after the CEO is hired. The data is consistent with horizontal di↵erentiation of CEO behavioral types, and firm-CEO matching frictions. We estimate that 17% of sample CEOs are mismatched, and that mismatches are associated with significant productivity losses.

Download the paper