{"title":"Do CEO Characteristics Matter in Product Recalls?","authors":"António Miguel Martins, C. Pires","doi":"10.1080/13571516.2023.2213127","DOIUrl":null,"url":null,"abstract":"Abstract This study examines the effect of CEO characteristics such as gender, age, tenure, functional background, stock ownership, compensation scheme and dual role on the stock market returns of automobile companies, around the announcement of product recalls. Using an event study, for a sample of 2,576 product recalls in the US automobile industry, between January 2010 and June 2021, we observe that the stock market’s reaction to a product recall announcement is negative. However, the impacts on the cumulative abnormal returns around the announcement of product recalls of the company’s CEO being female, the CEO tenure, the CEO having an operations or marketing background, the ratio of CEO long-term compensation to total compensation and the CEO and Chairperson being the same person are all positive and statistically significant, showing that these CEO characteristics mitigate the negative effects on a company’s financial value caused by product recalls.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":null,"pages":null},"PeriodicalIF":1.9000,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of the Economics of Business","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1080/13571516.2023.2213127","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 1
Abstract
Abstract This study examines the effect of CEO characteristics such as gender, age, tenure, functional background, stock ownership, compensation scheme and dual role on the stock market returns of automobile companies, around the announcement of product recalls. Using an event study, for a sample of 2,576 product recalls in the US automobile industry, between January 2010 and June 2021, we observe that the stock market’s reaction to a product recall announcement is negative. However, the impacts on the cumulative abnormal returns around the announcement of product recalls of the company’s CEO being female, the CEO tenure, the CEO having an operations or marketing background, the ratio of CEO long-term compensation to total compensation and the CEO and Chairperson being the same person are all positive and statistically significant, showing that these CEO characteristics mitigate the negative effects on a company’s financial value caused by product recalls.
期刊介绍：
International Journal of the Economics of Business presents original, peer reviewed research in economics that is clearly applicable to business or related public policy problems or issues. The term "business" is used in its widest sense to encompass both public and private sector—governmental, private non-profit and cooperative organizations, as well as profit-seeking enterprises. International Journal of the Economics of Business carries papers relating to three main spheres: The organization—to analyse and aid decision making and the internal organization of the business; The industry—to analyse how businesses interact and evolve within and across industries.
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