Superstar CEOs and innovation.

摘要

I empirically evaluate three theoretical views of whether and how winning a high-profile CEO award affects innovation decisions. The agency theory predicts that receiving an award will increase managerial entrenchment and reduce managers' efforts to create valuable innovations because they will either pursue value-decreasing pet projects or simply enjoy the quiet life (agency hypothesis). Conversely, the managerial myopia theory predicts that these awards may increase managerial job security and allow the CEO to focus on long-term innovative projects rather than on boosting the stock price through current earnings. Finally, the overconfidence theory predicts that these awards increase managerial incentives to innovate if they make CEOs overconfident. In my first set of tests, I find evidence that is consistent with the managerial myopia and overconfidence theories: award-winning CEOs innovate more than otherwise similar CEOs who do not win awards, both in terms of the number of patents and the number of citations per patent during the period 1992--2002. After further examination, the evidence continues to be consistent with the managerial myopia theory: there is a clear increase in CEO power and job security after winning a prestigious award and no such increase in overconfidence. I also document that the positive effect of CEO awards on innovation is weaker for firms with high institutional ownership. Overall, the evidence suggests that winning a prestigious award relieves managerial myopia and brings positive long-term benefits for the firm.