The CEO’s country of origin is an important driver that explains different types of firm performance, according to a recent study co-authored by Josep García Blandón (Universitat Ramon Llull), the UB Business School researcher Josep Maria Argilés Bosch and Diego Ravenda (Toulouse Business School). Anglo-Saxon CEOs show a significantly lower performance than CEOs from other regions. More specifically, CEOs from countries such as the United States, United Kingdom, Hong Kong, Canada, Australia and Papua New Guinea perform significantly worse at the environmental, social and governance level, resulting in a poorer overall performance. Therefore, the results challenge the conventional wisdom that Anglo-Saxon CEOs are the world’s top performers.
In fact, CEOs from the France civil-law region (i.e. France, Spain, Brazil, Mexico, Belgium, Netherlands and Argentina) show a stronger environmental, social and governance performance and a better overall performance. As for financial performance, CEOs from the German-Scandinavian civil-law region (i.e. Germany, Denmark, Sweden, Japan, Taiwan and Switzerland) are the best performers, whereas CEOs from the France civil-law region are the worst. Nonetheless, differences in financial performance are not statistically significant.
CEOs from the United States in particular show a significantly stronger financial performance than CEOs from other countries and a weaker performance at the environmental, social and governance level. However, these effects cancel-out and no significant overall performance differences can be detected between US and foreign CEOs.
The findings have been published in the Journal of Business Economics and Management under the title “Exploring the Relationship between CEO Characteristics and Performance”. The article examines the relationship between CEO characteristics and firm performance with a sample composed of the best performing CEOs in the world according to Harvard Business Review.
The findings also show that higher levels of financial performance are strongly associated with a weaker environmental, social and governance performance. This supports the view that the costs of implementing sustainability policies eventually result in a lower financial performance. The authors also reveal that outsider CEOs outperform insider CEOs in both financial and environmental, social and governance performance. This is consistent with the increasingly positive perception of outsider CEOs as suggested by the rate of outside CEO succession among the largest international organisations.
Focusing on the CEO educational background, CEOs with engineering degrees tend to show a significantly higher environmental, social and governance performance and, as a result, a stronger overall performance.
Finally, while the age of the CEO does not seem to be a driver of performance, CEO’s tenure in the firm appears to be an important factor. Specifically, CEOs with longer tenures in the firm show a stronger financial performance, but a weaker environmental, social and governance performance. This suggests that CEOs with a longer experience in the firm are more focused on financial performance, whereas recently appointed CEOs are more concerned with sustainability issues.