Top CEO awards and firm profitability

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Mohebbi, Taha
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In this study, we present novel insights into the influence of CEO awards on firm performance, with a particular focus on Glassdoor's “Top CEOs Employees Choice Award.” By matching winning firms with similar non-winning counterparts and analyzing a pooled sample using an event study, we find compelling evidence that receiving such an award is associated with a significant increase in future firm performance, as measured by Return on Assets (ROA). This increase is primarily driven by improvements in profitability margins. Moreover, post-award announcements, firms with higher Environmental, Social, and Governance (ESG) scores demonstrate more substantial ROA growth, particularly attributed to enhanced corporate governance. This suggests that the ESG channel for ROA enhancement is primarily driven by the Governance Score. Additionally, CEOs holding company shares and receiving higher compensation relative to assets experience accelerated ROA growth. It contributes to the literature on management awards by exploring the dual impact of awards on both firm performance and CEO prestige, with a particular focus on channels.
Awards, Principal-Agent, Employees, CEO, Environmental Social Governance (ESG)