How CEO/CMO characteristics affect innovation and stock returns : findings and future directions

Investor stock market response has received a great deal of attention in the marketing literature. However, firms are not faceless corporations; individuals such as CEOs set their strategies. Upper echelon and strategic leadership theories hold that chosen strategies derive from these individuals' opinions, which are a function of their personalities, demographics, experiences, and values. Building on recent literature, the authors propose how CEO characteristics can influence innovation and stock returns. Investors are motivated by cash flow expectations—in particular, the prospect of increasing and accelerating future cash flows, reducing associated risks, and increasing residual value. This systematic review focuses on four main characteristics—personality, demographics, experience and compensation—to arrive at a set of propositions on innovation and stock returns. After reviewing the extensive literature on CEO characteristics, the authors outline the emerging findings on CMO characteristics; propose future research directions on CEO and CMO characteristics, innovations, and stock returns; and offer implications for practice.

Keywords: Stock returns; CEO; CMO; Personality; Demographics; Experience; Compensation; Innovation

All authors contributed equally and are listed in reverse alphabetical order. John Hulland and Mark Houston served as editors for this article.

Introduction

A small group of executives at the top of an organization (i.e., the top management team [TMT][1]) can dramatically affect firm outcomes (Kashmiri and Mahajan [89]; Nath and Bharadwaj [118]; Srinivasan and Hanssens [137]). A firm's CEO determines many strategic firm decisions, including major market entry and exit, innovations, and resource allocations (Brower and Nath [19]; Hambrick and Mason [71]; Kashmiri et al. [90]). Ample managerial evidence shows that the trajectories and fortunes of companies are traceable to the actions (or inaction) of their top executives. This intuition is formalized in the upper echelon theory in management (Hambrick [69]; Hambrick and Mason [71]), which argues that organizations are reflections of top managers' cognitions, values, and personalities. It is complemented by the model of strategic leadership (Finkelstein and Hambrick [54]; Finkelstein et al. [55]), which attributes organizational outcomes to decisions made by senior executives (Cannella Jr and Monroe [25]). The basic argument in both these research streams is that the ways senior executives view opportunities and challenges and how they process and interpret the information they receive are shaped by their values, personalities, and cognitions (Cannella Jr and Monroe [25]).

At the same time, a third stream of research has focused on senior executive motivation and rewards (Carpenter and Sanders [26]; Finkelstein and Hambrick [53]) and, in particular, on the link among rewards, executive behavior, and firm outcomes. Using agency theory as the basis, researchers have analyzed how various aspects of fixed and variable compensation affect CEO and TMT strategic decisions. The main idea in this stream is that organizations can use compensation to align the incentives of key decision makers, specifically the CEO, with shareholders.

Our review of this literature reveals three critical points. First, while the personality of senior leaders and TMT compensation dominate the strategic leadership and finance/accounting literature, respectively, recent studies show how senior executives' demographics and experience influence the performance of their firms (Boal and Hooijberg [13]; House et al. [80]). Together, these characteristics represent internal (personality, demographics, and experience) and external (compensation) factors. They vary in the extent of controllability by the board: for example, a board can select a CEO based on experience, an observable measure, more readily than on his or her personality, which is less observable. Second, current empirical findings are rich on the CEO but not on other TMT members. Likewise, the strategic leadership literature has tended to focus on TMTs without distinguishing between the CEO as a leader and other senior executives. We account for this distinction by focusing our review of findings on CEOs, while proposing specific future research on both the CEO and chief marketing officer (CMO), the executive in charge of the marketing function in the firm. Third, TMT research has appeared in a broad set of domains, including marketing, management, finance, accounting, and economics. This proliferation of TMT research in diverse academic fields has resulted in a large body of literature that lacks integration and synthesis across disciplines. In addition, there is a need for an agenda with respect to future research directions.

Stock return[2] response is our primary outcome variable and is a key performance metric in the general marketing–finance research stream (e.g., Srinivasan and Hanssens [137]). Stock returns are related to cash flow expectations—in particular, the prospect of increasing and accelerating future cash flows, reducing associated risks, and increasing residual value (Srivastava et al. [139]). We therefore use cash flow expectations, when feasible, to motivate the effect of CEO characteristics on stock returns. While CEOs have many pathways through which to manage cash flows, one variable that has received a great deal of attention in extant literature is innovation[3] (e.g., Barker and Mueller [6]; Galasso and Simcoe [59]; Kashmiri et al. [90]). Because our research is based on a systematic review of extant literature, we use innovation as the second focal variable. Successful CEOs and CMOs achieve innovation, a key driver of stock returns, typically by focusing on new products and R&D (Lehmann [101]; Warren and Sorescu [153]; Yadav et al. [165]; Zahra and Pearce [168]), and we expect that lower-level managers will adjust their preferred level of innovation accordingly (e.g., Rubera and Kirca [130]). The litmus test of a relationship between top management incentives/characteristics and innovation is (1) how much actual innovation the firm develops for the market (e.g., Pauwels et al. [123]) and (2) how valuable that innovation is, which can be captured by, among other factors, the stock returns associated with this innovation (e.g., Srinivasan et al. [138]). We acknowledge that innovation is just one of the intervening variables in assessing the impact of CEO characteristics on stock returns, but other intervening variables (e.g., emotional intelligence, leadership) are not systematically reported in the literature we reviewed to offer propositions on them.

Because the routes by which CEO characteristics affect stock returns are important, we offer three types of propositions: CEO characteristics as directly linked to stock returns, CEO characteristics as indirectly linked to stock returns through innovation as a mediator, and innovation as a moderator on stock returns. For the propositions in which CEO characteristics are directly linked to stock returns, rather than simply reporting the direct empirical relationship from previous studies, we use four mechanisms noted above (Srivastava et al. [139]) to provide a theory-driven and logical framework for organizing and presenting the disparate set of other intervening variables.

To address the recent call for "generalizations in marketing" from the Journal of the Academy of Marketing Science, we undertake this review to fill the gap in marketing literature regarding "what we know" and "what we need to know" about the TMT–innovation and TMT–stock returns relationships. Specifically, we synthesize the literature and arrive at a set of propositions that capture extant knowledge in this area. While doing so, we also extend findings for CEOs to CMOs (on whom research is limited), using what we learn from our synthesis of the existing CEO/TMT literature (e.g., the categories of personality, demographics, experience, and compensation) to inspire a fresh research agenda for CMO research, and importantly we propose how the focal variables may influence CMO decision making.

Our research offers several contributions to both academia and practice. First, we integrate the literature on the four different CEO characteristics (personality, demographics, experience, and compensation) and examine how they drive innovation and stock return impact. Through our synthesis of the literature, we provide 10 propositions that summarize the state-of-the-art in the literature on this topic, as well as identify gaps in the literature. Second, we extend existing research to CMOs and offer specific areas for future research. We advance knowledge on the role of marketing in the firm, guide scholars on how to approach CMO issues, and provide specific suggestions on potential hypotheses and analysis. Third, we offer specific advice on how to measure TMT characteristics beyond those of CEOs across many companies and industries.

For managers, our research is relevant for three reasons. First, their understanding of TMT characteristics helps them influence innovation decisions, with direct implications on how to advocate for innovation projects and budgets. Second, the identified tradeoff between returns and risks helps them assess the likely innovation and firm value changes from a change in the TMT. Third, the study's findings provide managerial guidance on TMT recruitment and retention, accounting for personality, demographics, experience, and compensation. We also highlight when managers are likely to benefit from refuting common wisdom, including how to better anticipate how their own characteristics might help or hinder their performance.

Synthesizing the TMT literature

To accomplish our study's goals, we synthesized the TMT literature from 2000 to 2018 following the general procedure in previous systematic reviews (e.g., Cleeren et al. [35]; Peloza and Shang [124]). First, we conducted an issue-by-issue search of publications on the relationship between CEO/CMO/TMT and innovation/stock returns from major marketing journals and leading journals in related fields, such as management, accounting, finance, and economics, on the UT Dallas top journal list (see Web Appendix 1 for the full list). Second, given the structure that emerged from the literature for our theoretical framework, we used keyword searches (e.g., "TMT/CEO/CMO overconfidence," "sensation seeking," "military background," "political ideology," "facial traits," "narcissism," "future attention focus," "strategic leadership," "age," "education," "gender," "socioeconomic origin," "tenure," "functional expertise," "networks," "duality," "compensation," and "innovation/stock returns") in several electronic databases such as ABI/INFORM, Business Source Premier, Google Scholar, and Social Science Research Network to better identify articles pertinent to our study. Finally, we reviewed the reference list in all the obtained articles.

We included articles using two criteria. First, we included articles that empirically examine how TMT/CEO/CMO personality, demographics, experience, and compensation affect innovation. Second, we focused on studies that explore the stock return impact associated with CEO characteristics through innovation and other intervening variables, in particular the prospect of increasing and accelerating future cash flows, reducing associated risks, and increasing residual value (Srivastava et al. [139]). We therefore excluded studies that focus solely on firm revenue and/or profit in the TMT literature—those few articles are included in Web Appendix 2. Our search resulted in 170 articles. Figure 1 shows the number of articles by journal and field.

Graph: Fig. 1 Number of articles by journal and field

We proceed as follows: We briefly explain our conceptual framework and the procedure followed to arrive at our propositions. For each variable in each category, we identify articles that examine the impact of the focal variables on either innovation or stock returns. We then synthesize the findings in the literature to arrive at a set of propositions on the impact of the relevant focal variables on innovation and stock returns. Drawing on these propositions, we identify gaps in the literature and propose a rich agenda for future research.

Conceptual framework: CEO characteristics and innovation/stock returns

Within any organization, the "levers of power are uniquely concentrated in the hands of the CEO" (Nadler and Heilpern [117], p. 9). The marketing, management, and finance literature acknowledge that CEO characteristics explain organizational outcomes (Boyd and Kannan [16]; Hambrick and Mason [71]; Warren et al. [154]). CEOs have the power, and arguably even the obligation, to set the direction of the firm (see Hambrick and Mason [71]). They often have considerable discretion to define the strategic orientation of the firm, and innovation often plays a key role in shaping and realizing those strategies. In keeping with this theory, researchers in a variety of management fields (e.g., strategy, finance, marketing) have investigated the potential impact of several variables that may affect TMT behavior, innovation, and, thus, firm performance (Hambrick and Mason [71]). Figure 2 shows our framework, based on a review of the literature and an analysis of the variables commonly used.

Graph: Fig. 2 Conceptual framework: CEO characteristics and stock returns

On the left-hand side of Fig. 2, we classify the variables most commonly examined in the literature into four key categories, which capture both internal and external factors. First, CEOs' personality traits can affect their choices and, thus, organizational performance (Hambrick and Mason [71]). CEO personality characteristics that we consider include overconfidence, sensation seeking, military background, and political ideology. Second, demographics matter (Hambrick and Mason [71]) and have the advantage of straightforward measurement. We focus on three demographic characteristics: age, education, and gender. Third, experience captures the background characteristics that provide much of the knowledge and values the CEO brings to bear on judgments and decisions that affect firm strategy. We include tenure and functional expertise as main indicators of experience. While these three categories can be considered internal characteristics of an executive, our last category captures the firm's input in incentivizing the optimal decisions from its TMT: compensation. Our four categories, therefore, are comprehensive in capturing the internal and external factors likely to influence CEO decision making.

On the right-hand side of Fig. 2, we highlight our key dependent variable: stock returns. In the middle of the figure, the variable innovation mediates the relationship between CEO characteristics and stock returns through the indirect route. We are interested in innovation because it is one of the main intervening variables through which CEO characteristics affect firm performance (as reflected in stock returns). The figure also shows that CEO characteristics can be linked to stock returns without having an effect on innovations. In the source articles reviewed, we found that multiple intervening variables affect the relationship between CEO characteristics and stock returns. For example, in the CEO education–stock return relationship, emotional intelligence, leadership, and network could be intervening factors. In essence, there are dozens of such intervening variables other than innovation across the studies we analyze that affect stock returns. Furthermore, few of these variables feature in enough articles to generalize their effects.

Therefore, we incorporate into our conceptual framework the mechanisms in Srivastava et al. ([139]) that drive shareholder value: (1) an increase in the level of cash flows, (2) an acceleration of cash flows, (3) a reduction in risk associated with cash flows, and (4) the residual value of the business. First, CEO characteristics can translate into firm strategies that can enhance shareholder value by growing the level of cash flows (i.e., more cash), by increasing revenues and lowering costs. For example, firms with financially conservative CEOs might generate increased cash flows from reduced expenses that boost the firm's bottom-line performance. Second, CEO characteristics that result in firm strategies that help accelerate the receipt of cash flows (i.e., faster cash) can enhance a firm's shareholder value. For example, CEO characteristics and traits associated with the exploration of new, high-growth markets may result in accelerating the firm's cash flows. Third, CEO actions can increase shareholder value by reducing the vulnerability and volatility of these cash flows (i.e., safer cash), which results in a lower cost of capital or discount rate (Srivastava et al. [139]). Thus, all else being equal, cash flows that are stable have a higher net present value and thus create more shareholder wealth. For example, experienced CEOs may have a broader knowledge base and richer skillsets to draw on to handle demand uncertainties, which may help smooth out the variability in cash flows. Fourth, CEO characteristics may increase the residual value of the firm. For example, CEOs with marketing functional expertise may be uniquely qualified to build differentiated brands that can increase the equity of the brands and, thus, the firm's residual value.

We therefore argue that CEO characteristics can help increase, accelerate, and stabilize the firm's cash flows and increase its residual value through a direct link, thus influencing the outlook of investors. Together, we offer three types of propositions on CEO characteristics that (1) have innovation as a moderator on stock returns, (2) are indirectly linked to stock returns through innovation as a mediator, and (3) are directly linked to stock returns through other variables.[4]

CEO personality

A quickly growing research stream links CEO personality characteristics with innovation. However, surprisingly few articles link CEO personality to stock returns, as we show in Table 1.

CEO personality and stock returns: Overview of findings

Characteristic	Illustrative article	Explanatory variable operationalization	Focal variable operationalization	Findings
Overconfidence	Malmendier and Tate (2005)	Holder67 = 1 for CEO who fails to exercise an executive option after stock price has risen by at least 67%	Investment = firm capital expenditures normalized by the capital at beginning of the year	Overconfident managers overestimate the returns to their investment projects and view external funds as unduly costly. Thus, they overinvest when they have abundant internal funds but curtail investment when they require external financing.
Overconfidence	Galasso and Simcoe (2011)	Holder67 indicator	Citation-weighted patent counts	Overconfident CEOs, who underestimate the probability of failure, are more likely to pursue innovation, and this effect is greater in more competitive industries.
Overconfidence	Hirshleifer et al. (2012)	Holder67 and a fixed effect "maximum holder67"	Standard deviation of stock returns; innovation = R&D expenditures and patenting activities	Overconfident CEOs have greater return volatility, invest more in innovation, obtain more patents & citations, and have innovative success for given R&D expenditures. However, they do so only in innovative industries.
Sensation seeking	Sunder et al. (2017)	Pilot license	Patents and cumulative abnormal returns at their announcement, R&D productivity	Patents by pilot CEOs create more shareholder value; those by military CEOs create less. Pilot CEOs enhance innovation performance by improving R&D productivity.
Military background	Benmelech and Frydman (2015)	Military service listed in "Who's Who in Commerce"	Tobin's q, R&D investment, corporate investment, fraud	Military CEOs pursue lower corporate investment, invest less in R&D, are less likely to be involved in corporate fraudulent activity.
Military background	Lin et al. (2018)	Hand collected from the executives' resumes	R&D investments Return on sales	Military CEOs perform more poorly than others, except in downturns, and they are more likely to be involved in fraud.
Political ideology	Kashmiri and Mahajan (2017)	Political contributions by CEO to Democratic and/or Republican party	New product introductions, Tobin's q, stock market volatility	Firms led by Democratic-leaning CEOs have more NPIs and higher Tobin's q but also stock return volatility. Effects are weaker when CEOs have low power, when the marketing department has high influence, and when the economy is growing.
Political ideology	Unsal et al. (2016)	Financial contributions to both Democratic and Republican parties during elections	Tobin's q, agency cost of free cash flow, excess return over time	Compared with Democratic and Apolitical rivals, Republican managers generate higher agency costs of free cash flow, lower Tobin's q, and smaller increases in buy and hold abnormal returns.

Overconfidence

Overconfidence refers to the tendency of individuals to believe they are better than they really are in terms of, for example, ability, judgment, or gauging the prospects of a successful outcome (Hirshleifer et al. [76]). This trait is highly applicable to TMTs because overconfidence increases with individual skill (Camerer and Lovallo [24]) and complexity in the relationship between actions and outcomes (Moore and Kim [112]). With the exception of Stock et al. ([140]), previous studies have found that CEO overconfidence is positively related to innovation (e.g., Galasso and Simcoe [59]; Hirshleifer et al. [76]; Malmendier and Tate [108]; Simon and Houghton [135]). For example, Galasso and Simcoe ([59]) document that companies with an overconfident CEO have more citation-weighted patents. Likewise, Hirshleifer et al. ([76]) find that overconfident CEOs invest more in innovation and obtain more patents and patent citations. Literature also shows that overconfident individuals may overestimate the expected future returns and underestimate the likelihood of failure from uncertain endeavors, because they tend to overestimate their own ability to control situations and make optimal decisions (Griffin and Tversky [66]; Langer [99]; Simon and Houghton [135]; Weinstein [156]). It follows that overconfident CEOs are more willing to initiate innovation-related activities. Thus:

P1a:

CEO overconfidence is positively related to innovation

At the same time, the literature implies a direct negative effect of overconfidence on stock returns because overconfident individuals engage in more uncertain endeavors, thus increasing cash flow volatility. Malmendier and Tate ([108]) document that overconfident CEOs tend to engage in unprofitable mergers and suboptimal investment behavior, which may result in deceleration of cash flows and reduction of the firm's residual value, thereby destroying firm value. Similarly, Doukas and Petmezas ([43]) show that CEO overconfidence can lead to lower merger-and-acquisition announcement returns, with decreasing cash flows arising from poor long-term performance in these situations.

This direct negative effect competes with the indirect positive effect through innovation. Hirshleifer et al. ([76]) show that overconfident CEOs are more willing to undertake risky but valuable innovation and are better at translating external opportunities into increased cash flows and, thus, firm value. CEO overconfidence generates value through greater exploration and risk taking, increasing cash flows, albeit with higher volatility of cash flows, and resulting in a favorable investor reaction (Bernardo and Welch [9]; Goel and Thakor [62]). Thus:

P1b:

CEO overconfidence has an indirect positive relationship to stock returns through innovation

P1c:

CEO overconfidence has a direct negative relationship to stock returns

Sensation seeking

While overconfidence and risk taking tend to increase corporate innovation (Galasso and Simcoe [59]; Hirshleifer et al. [76]), they may not be sufficient for innovation success. Dyer et al. ([44]) survey of 5000 executives finds that successful innovators are constantly trying out new experiences and piloting new ideas. Prior studies highlight sensation seeking, defined as "the seeking of varied, novel, complex and intense sensations and experiences, and the willingness to take physical, social, legal, and financial risk for the sake of such experiences" (Zuckerman [171], p. 27). Extant research has shown that sensation seekers are more likely to be innovative because they are creative, are open to new experiences, prefer changes, and dislike structured and repetitive situations (Mittelstaedt et al. [111]; Roberti [128]). For example, Sunder et al. ([144]) show that firms led by sensation-seeking CEOs generate greater innovation outcomes, measured by patents and associated citations. Thus:

P2a:

CEO sensation seeking is positively related to innovation

Furthermore, literature has shown that the creativity and novelty-seeking characteristics of sensation-seeking CEOs imply proactive, nonroutine searches for new and innovative ideas and creation of new opportunities, which enhance product innovation to achieve higher and faster cash flows and financial performance (Cain and McKeon [22]). Consistently, Sunder et al. ([144]) find that for the CEO, sensation seeking is associated with higher abnormal returns for patent announcements. They use CEOs' penchant for flying small aircrafts as a hobby to capture their innate desire for novel experiences that entail risk and find that pilot CEOs are associated with more successful and original innovation. In contrast with this evidence for a positive stock return impact through innovation, no research to our knowledge shows positive effects through other intervening variables. Thus:

P2b:

CEO sensation seeking has an indirect positive relationship to stock returns through innovation

Military background

Service in the military may alter individuals' behavior in various ways that could affect their decisions and actions when they become CEOs later in life (Benmelech and Frydman [8]).[5] Although psychology literature indicates that military service is associated with overconfidence, aggressiveness, and risk-taking behavior (Elder [46]; Elder Jr. and Clipp [47]; Elder Jr. et al. [48]), a few recent studies (e.g., Benmelech and Frydman [8]; Lin et al. [105]) find that firms run by military CEOs are less likely to innovate. For example, Benmelech and Frydman ([8]) find that CEOs with a military background invest less in R&D and pursue less corporate investment. Consistently, Lin et al. ([105]) show that firms led by military CEOs are associated with lower expenditures on R&D than their nonmilitary peers in China. This evidence can be explained by the argument that military training and service values subordination to political authority, duty, dedication, and self-sacrifice, which may lead to a corporate culture that encourages low risk taking and conservative investment behavior (Benmelech and Frydman [8]; Franke [56]). Thus:

P3a:

CEO military background is negatively related to innovation

Moreover, many studies have explored the relationship between executive military background and firm performance. Sunder et al. ([144]) find that patent announcements by military background CEOs increase abnormal returns less than those by nonmilitary CEOs. In addition, Benmelech and Frydman ([8]) show a negative main effect of military CEOs on firm performance, which turns nonsignificant after they account for an MBA degree. Lin et al. ([105]) find a 3% lower return on sales for CEOs with versus without a military background. This is probably because conformity, discipline, and bureaucratic behavior, which are fostered in military service, discourage entrepreneurial behavior and innovativeness (Avrahami [3]), thus yielding lower and slower cash flows than firms led by nonmilitary CEOs. In summary, studies finding negative stock return effects all attribute these to lower innovation, while none have shown a direct negative effect that does not operate through innovation. Thus:

P3b:

CEO military background has an indirect negative relationship to stock returns through innovation

Political ideology

Political ideology is a multidimensional concept, but many Americans identify themselves along the liberal–conservative continuum (for a review, see Jost et al. [86]). The political ideology of CEOs, which reflects their beliefs and values, influences their managerial actions and decisions (Chin et al. [33]). While liberal ideology goes hand-in-hand with an openness to ambiguity and tolerance of change (Conover and Feldman [38]; Jost et al. [86]), political conservatism entails resistance to change and fear of uncertainty (Giddens [61]). As such, we expect politically liberal CEOs to exhibit greater innovation propensity than their politically conservative counterparts, which is strongly supported by the empirical findings. Behaviorally consistent with the basic tenets of conservative ideology, firms led by Republican-leaning CEOs have lower levels of R&D expenditures (e.g., Hutton et al. [83]) and lesser inclination to innovate (e.g., Kashmiri and Mahajan [89]) than firms led by Democratic-leaning CEOs. Thus:

P4a:

CEO liberal ideology is positively related to innovation

Several studies hypothesize and find that liberal CEOs' greater risk tolerance and openness to ambiguity are manifested in their strategic decisions, which accelerates cash flows but also increases cash flow volatility. Kashmiri and Mahajan ([89]) document that firms led by Democratic-leaning CEOs have higher stock returns but also higher stock return volatility. Similarly, Unsal et al. ([147]) find that compared with firms with Democrat CEOs, firms with Republican CEOs experience relatively poorer firm performance, more agency conflicts, and less increases in buy-and-hold abnormal returns.

For the direct stock returns effect, Republican CEO–led firms also show lower levels of corporate debt (Hutton et al. [83]) and a lower degree of tax avoidance (e.g., Christensen et al. [34]) than Democrat CEO–led firms. Controlling for the degree of innovation, such conservative management should increase cost-efficiency and thus increase cash flows and firm performance. However, Republican CEO–led firms also show lower emphasis on corporate social responsibility (e.g., Chin et al. [33]), which can reduce stock returns and stock return response to owned social media (Colicev et al. [37]). Given these opposing effects, the jury is still out on the net direct effect of CEO ideology on stock returns. Thus:

P4b:

CEO liberal ideology has an indirect positive relationship to stock returns through innovation

CEO demographics

For demographic characteristics, we focus on CEOs' age, education, and gender. Table 2 provides an overview of research findings linking demographics to innovation and stock returns.

CEO demographics and stock returns: Overview of findings

Characteristic	Illustrative article	Explanatory variable operationalization	Focal variable operationalization	Findings
Age & Education	Barker and Mueller (2002)	Age in years No college, undergraduate, master's, doctorate; Number of business/economics (or science/engineering) degrees	Total R&D dollars	R&D spending is greater for firms with younger CEOs. CEO education level has no significant association with R&D spending after a CEO has attained a college degree. Number of science/engineering degrees is positively associated with R&D spending; number of business degrees has no association with higher R&D spending.
Age & Education	Bertrand and Schoar (2003)	Age in years MBA degree vs. not	ROA and Tobin's q; R&D investment	Older executives choose less aggressive strategies. CEOs with MBA degree are associated with ROA levels on the order of 1% higher than for non-MBA graduates and choose more aggressive corporate strategies.
Age	Serfling (2014)	Age in years	R&D intensity; Abnormal stock returns	Older CEOs invest less in R&D. Firms managed by older CEOs underperform firms led by younger CEOs.
Age, Education & Gender	Zhang and Sun (2017)	Age in years Special, college, undergraduate, master, doctorate Proportion of women in TMT	R&D investment; R&D intensity	TMT executive's age (education level) is negatively (positively) associated with R&D investment. No significant positive relationship between percentage of women in TMT and R&D investment.
Age	Morresi (2017)	Age in years	ROA; ROE; market-to-book ratio; stock returns	Firms led by younger CEOs at the time of their appointment perform better than others.
Age & Education	Cheng et al. (2010)	Age in years 4-year university degree or above vs. not	ROA; EPS; Cumulative stock returns; Cumulative abnormal returns	Older CEOs are more likely to generate higher ROA, cumulative stock returns, and cumulative abnormal returns. Firms perform better when they are managed by CEOs who possess a university degree or above.
Age, Education & Gender	Nguyen et al. (2015)	Age in years MBA degree vs. not; Ivy League vs. not Female CEO vs. not	Cumulative abnormal returns	CEO's age is positively and significantly related to firm's stock market returns. CEO's Ivy League education is significantly and positively related to firm's stock market returns. CEO's MBA degree is not related to firm's stock market returns. No significant relationship between CEO gender and stock market returns.
Education	Camelo et al. (2010)	Non-university studies, diploma holder/technical engineer, graduate/ engineer, doctor/master	Number of new products; Number of improved products	A higher education level in the TMT has a positive effect on the firm's innovation performance.
Education	Lin et al. (2011)	College or above vs. not	R&D intensity	CEO education level is positively associated with firm's R&D investment.
Education	King et al. (2016)	Undergraduate, MBA, doctorate; top-20 school vs. not	Bank's ROA less mean ROA of all other banks	CEOs with better MBA education who follow riskier or more innovative business models achieve superior bank performance outcomes.
Education	Goll et al. (2001)	High school, some college, Bachelor's degree, Master's degree, JD, doctorate	ROA; ROE; return on sales (ROS); earnings per share (EPS)	TMT education level is positively related to firm performance.
Education	Bhagat et al. (2010)	MBA degree vs. not	ROA (short-term); Stock returns and Tobin's q (long-term)	Firms led by CEOs with an MBA degree from the top 20 business schools have greater stock returns and a higher ROA.
Gender	Dezsö and Ross (2012)	Female CEO vs. not	Tobin's q	Female executives improve firm performance but only insofar as a firm's strategy is focused on innovation.
Gender	Yao (2015)	Female CEO vs. not	R&D; Patent; Total innovation expenditure	Female CEOs can significantly promote firms' technological innovation.
Gender	Strohmeyer et al. (2017)	Female leader vs. not	New or substantially improved products or services	Firms led by women exhibit less innovation breadth and depth than those led by men.
Gender	Jalbert et al. (2013)	Female CEO vs. not	ROA; ROE; ROI	Female CEOs are positively related to firm's ROA and ROI.
Gender	Khan and Vieito (2013)	Female CEO vs. not	ROA adjusted	ROA increases much more if the firm is managed by a female CEO instead of a male CEO.
Gender	Peni (2014)	Female CEO vs. not	Tobin's q and ROA	There is a positive relationship between the presence of female CEOs and firm performance.
Gender	Lee and James (2007)	Female CEO vs. not	Stock returns	Announcements of female CEO appointments generate more negative stock market reactions than announcements of male CEOs.

Age

Age is an important indicator of a person's experience. Previous research has investigated the relationship between the age of TMT executives and firms' innovation, and there is reasonable consensus that CEO age is negatively linked to innovation (e.g., Barker and Mueller [6]; Bertrand and Schoar [11]; Serfling [132]; Zhang and Sun [169]). For example, Barker and Mueller ([6]) find that R&D expenditure is greater at firms with younger CEOs. Consistent with this, Serfling ([132]) shows that older CEOs invest less in R&D. This may be because younger CEOs attempt to signal superior capability to the market by pursuing aggressive investments in innovation (Prendergast and Stole [126]). By contrast, older CEOs might have greater commitment to the status quo of the firm and more concerns about their own financial and career security and therefore are less willing to grasp new ideas for innovation (Hambrick and Mason [71]; Yim [167]). Moreover, they are slower in learning new technologies and less likely to seek growth through innovative strategies in an effort to seize perceived opportunities (Grund and Westergård-Nielsen [67]; Hambrick and Mason [71]). Thus:

P5a:

CEO age is negatively related to innovation

Regarding the relationship between CEOs' age and stock returns, the results from previous studies are mixed. For example, Morresi ([114]) shows that CEO age is significantly negatively related to firm performance measured by return on assets (ROA), return on equity (ROE), and stock returns. Similarly, Serfling ([132]) finds that firms managed by younger CEOs earn significantly higher risk-adjusted stock returns. Prior research shows that executives at a young age are more likely to challenge the status quo and report greater pressure for change in their companies, and thus they attempt to adopt novel and innovative approaches (Child [32]; Hambrick and Mason [71]). As discussed previously, innovation can accelerate cash flows, which in turn increase stock returns (Srinivasan et al. [138]; Warren and Sorescu [153]; Warren et al. [154]). Thus, we expect younger CEOs to be associated with greater stock returns, mediated by innovation.

Moreover, literature shows that CEO age has a direct positive relationship to stock returns without influencing innovation. Cheng et al. ([31]) find that older top executives are more likely to generate higher cash flows, resulting in higher ROA and stock returns in Chinese companies. This is partly because older executives are more apt to strengthen cohesiveness among organization members, which consequently leads to greater efficiency in strategy execution. Firms with such CEOs may also garner higher firm residual value. Consistent with this, Nguyen et al. ([120]) find that CEO age is positively and significantly associated with stock returns in the U.S. banking sector. From an organizational learning perspective, older CEOs may have richer work and life experiences to handle more complex and ambiguous business problems than younger CEOs, which could lead to stable cash flows and positively affect stock returns (Reed and DeFillippi [127]; Worthy et al. [164]). Given these arguments, we propose the following:

P5b:

CEO age has a U-shaped relationship to stock returns, partially mediated by innovation

Education

Education can be a signal of a person's knowledge, skill base, and cognitive ability. The level of education (i.e., amount of formal schooling), type of education (mainly MBA degree or others), and quality of education (the university's prestige) are the most important indicators of CEOs' educational background and have been linked to firm performance in the literature. While Barker and Mueller ([6]) find no association between the amount of education and firm innovation after a CEO has attained a college degree, other studies find that more innovative organizations are led by CEOs with higher levels of education (e.g., Camelo et al. [23]; Lin et al. [104]; Zhang and Sun [169]). For example, Camelo et al. ([23]) find a positive relationship between top executives' education level and innovation, measured by the number of new/improved products and the number of registered patents. Similarly, Lin et al. ([104]) show that CEO education level is positively associated with firms' R&D intensity. They argue that CEOs with a better education may have greater cognitive complexity, such that they are more capable of acquiring and processing complex information and can make decisions faster (Wally and Baum [150]). In addition, more educated CEOs may be more curious and open to novel concepts and more likely to be receptive to new ideas and changes (Kimberly and Evanisko [94]; Thomas et al. [146]).

Regarding the relationship between the type of education of CEOs (mainly MBA degree or others) and innovation, Barker and Mueller ([6]) fail to find a significant association. However, later studies such as those of Bertrand and Schoar ([11]) and King et al. ([95]) show that CEOs with an MBA degree choose riskier corporate strategies and innovative business models. This may be due to the likely positive effect of professional management training of CEOs, obtained through an MBA degree, on the risk management and administrative complexity of firms (Hambrick and Mason [71]). Thus:

P6a:

Both CEO education level and MBA degree are positively related to innovation

Furthermore, several studies link the CEOs' education level to stock returns and show a direct positive relationship between them. For example, Cheng et al. ([31]) find that firms with CEOs who possess a university degree or above achieve higher ROA and stock returns than CEOs who do not. They argue that CEOs' intellectual competence, which can stem from education, is an essential component in generating new managerial skills to achieve competitive advantages for their brands, leading to higher cash flows. In addition, CEOs with more prestigious educational backgrounds enjoy more "weak ties" to government officials and other key decision makers to conduct their business effectively (Gottesman and Morey [64]), and thus such backgrounds are an important human and social capital for the firm that also increases cash flows. Moreover, Goll et al. ([63]) show that CEOs with a higher education level can generate better firm performance such as ROA, ROE, and earnings per share (EPS). Such CEOs may be more cognitively capable of processing information and dealing with unexpected circumstances, reducing cash flow vulnerability, raising residual value (Gottfredson [65]; Henderson and Fredrickson [74]), and ultimately resulting in more stable cash flows.

Regarding the association between executives' MBA degree and stock performance, whereas Nguyen et al. ([120]) find that having an MBA degree does not affect firms' stock returns, several studies (e.g., Bertrand and Schoar [11]; Bhagat et al. [12]) document that firms led by CEOs with MBA degrees have higher stock returns. For example, Bhagat et al. ([12]) find that when a CEO has an MBA degree from a top-20 business school, operating performance improves, resulting in increased cash flows and, thus, higher stock returns and ROA. Relatedly, Bertrand and Schoar ([11]) show that CEOs with an MBA degree are associated with ROA levels 1% higher than the levels for non-MBA graduates. MBA programs, in particular, provide CEOs with the most advanced skills in all areas of firm management (e.g., marketing, accounting, finance, strategic management) to handle administrative complexity and uncertainties, which reduces cash flow volatility. Such CEOs are also likely to be more responsive to the presence of growth opportunities, increasing the residual value of the firm. Moreover, CEOs with an MBA degree are likely to have better social connections to obtain more resources and opportunities, which may result in superior cash flows and, thus, firm performance. As such, we expect a direct positive relationship between CEOs' MBA degree and stock returns:

P6b:

Both CEO education level and MBA degree have a direct positive relationship to stock returns

Gender

Extant studies report mixed findings regarding gender: female executives are positively (e.g., Yao [166]), negatively (e.g., Strohmeyer et al. [142]), or not (e.g., Zhang and Sun [169]) associated with innovation. On the positive side, female CEOs can significantly promote firms' technological innovation (e.g., Yao [166]). In general, gender diversity can facilitate high levels of creativity and innovation (Hoffman and Maier [77]; Wiersema and Bantel [161]). TMTs are often overwhelmingly comprised of men, but female CEOs can bring more thorough information processing to TMTs and provide firms with diverse viewpoints and different methods to solve problems. Research has shown that, in general, women have superior skills to men in fostering the exchange of ideas and knowledge, resolving conflicts, adapting to changes, and motivating and inspiring others, all of which are critical to innovation (Dezsö and Ross [42]; Krishnan and Park [97]).

By contrast, Strohmeyer et al. ([142]) show that firms led by women exhibit less innovation breadth and depth than those led by men. This finding receives support in studies in psychology/economics literature that find that women are more risk averse and less confident than men in making investment decisions (Bernasek and Shwiff [10]; Byrnes et al. [21]). In a similar vein, Faccio et al. ([50]) document that transitions from male to female CEOs are associated with a significant decline in corporate risk taking and, thus, innovation outcomes.

Although research shows that highly competitive industries may generate more demand for innovations (Myers and Marquis [116]), to our knowledge no prior research has formally tested the industry difference in the effect of gender on innovation. However, one related study (Kalleberg and Leicht [88]) examines the effect of industry differences on the relationship between gender and organizational performance, such as survival and gross earnings. The authors find that none of the industry variables (i.e., size, change in size, and competition) were related to changes in earnings for either men or women. Thus, we provide two alternative propositions:

P7a:

Female CEOs are positively associated with innovation.

P7b:

Female CEOs are negatively associated with innovation.

Beyond innovation, research findings on the relationship between CEO gender and stock returns are also mixed. Researchers have found a positive (e.g., Jalbert et al. [84]; Khan and Vieito [92]; Moreno-Gómez et al. [113]; Peni [125]; Strøm et al. [143]), negative (e.g., Lee and James [100]), or nonsignificant (e.g., Nguyen et al. [120]) relationship between female CEOs and firm stock returns. For example, Jalbert et al. ([84]) and Peni ([125]) document that female CEOs have a direct positive relationship to firms' ROA through their actions that increase cash flows and accelerate cash flows. Specifically, the "feminine management style," such as sharing information and power, encouraging participation and inputs from others, and providing contingent rewards (e.g., recognizing and praising others' good performance), may foster a supportive work environment, improving firm cash flows and growth (Eagly et al. [45]). Moreover, Peni ([125]) argues that female CEOs can offer additional insights into building and maintaining relationship with consumers and business partners (Daily et al. [40]), resulting in more stable cash flows and residual value of cash flows (Srivastava et al. [139]). As such, female CEOs may improve firm stock returns.

Furthermore, Dezsö and Ross ([42]) find that innovation positively moderates the effect of female CEOs on firm performance. A supportive argument suggests that female leaders help stimulate a broader discussion of divergent perspectives, which is valuable for tasks requiring creative solutions, such as the innovation process (Van Knippenberg et al. [148]). Female CEOs also prompt greater motivation and organizational commitment among lower-level female managers to participate in innovation-related activities (Dezsö and Ross [42]). Thus, female executives might be particularly beneficial for firms with an innovation focus.

However, Lee and James ([100]) demonstrate the underperformance of female CEOs relative to their male counterparts. They find that announcements of female CEO appointments are directly associated with more negative stock market reactions than announcements of male CEOs. This is probably because female CEOs' differentiated transformational leadership (i.e., ability of leaders to vary their behavior on the basis of followers' individual differences and contextual factors) is more strongly negatively related to TMT effectiveness in terms of joint decision making, which may decelerate cash flows and decrease cash flows (Zhang et al. [170]). Given these arguments, we propose the following:

P7c:

Female CEOs have a direct positive relationship to stock returns.

P7d:

Innovation strengthens the positive relationship between female CEOs and stock returns.

P7c:

Female CEOs have a direct negative relationship to stock returns.

CEO experience

We consider two main indicators of TMT experience: tenure and functional expertise. Table 3 provides an overview of research findings linking CEO experience to innovation and stock returns.

CEO experience and stock returns: Overview of findings

Characteristic	Illustrative article	Explanatory variable operationalization	Focal variable operationalization	Findings
Tenure & Functional experience	Barker and Mueller (2002)	Experience in marketing/sales; R&D engineering; finance/accounting & legal	R&D expenditure: total R&D dollars spent per employee by each firm relative to its industry average.	R&D spending is greater at firms in which CEOs have longer tenure and significant career experience in marketing and/or engineering/R&D.
Tenure	Balsmeier and Buchwald (2014)	CEO tenure in office in years	Patent application, Patent citation, Presample patent stock	CEO tenure has a negative influence on patenting activity of 8% per year. May reflect lower incentives to foster innovations, the longer the CEO is in the office the less likely he/she is able to reap the benefits.
Tenure	Chen (2013)	CEO tenure in office in years	R&D expenditures to total sales	An inverted U-shaped relationship between CEO tenure and R&D investment, with positive moderating effects of board human and social capital.
Tenure	Simsek (2007)	CEO's number of years in office	TMT risk taking measured using 3-item, 7-point scale	CEO tenure indirectly influences performance through its direct impact on TMT risk-taking propensity and the firm's pursuit of entrepreneurial initiatives.
Tenure	Huson et al. (2001)	Annual compensation, CEO turnover	Accounting earnings and stock returns	Outside appointment is associated with positive stock market reaction and higher post turnover firm performance.
Functional experience	Saboo et al. (2017)	Dummy variable: 1 if the dominant background of the CEO is in a throughput function and 0 otherwise	Cumulative abnormal returns	Acquirer CEO's throughput background and acquisition experience negatively moderate the target's innovation resource quality and the acquirer's marketing intensity positively moderates the influence of innovation overlap.
Functional experience	Talke et al. (2011)	Functional background: finance, marketing, HR, product/operations, R&D, IT, legal/general counsel, and others. Heterogeneity: Herfindahl index.	Firm innovativeness: degree of innovativeness of the firm's new product portfolio; Tobin's q	TMT functional diversity has a strong positive effect on a firm's innovation orientation. A strong proactive focus on customer needs and novel technologies leads to a portfolio of new products with higher market and technology newness, which increase firm performance.
Functional experience	Boyd and Kannan (2018)	Percentage of a CEO's functional experience in marketing and sales	Market value: Stock price × common shares outstanding	CEO market experience is a factor in influencing the value a firm creates from receiving third-party recognition for design excellence.
Functional experience	Whitler et al. (2018)	Number of board members with executive level marketing experience	Annual revenue growth: year-over-year percentage change in annual firm revenues	Marketing-experienced board members positively affect firm-level revenue growth, and this relationship is strengthened or weakened by important contingencies that occur in the firm.

Tenure

CEOs act according to their understanding of the strategic situations they face (Hambrick and Mason [71]). This understanding is shaped by their tenure (e.g., Chen [29]), which reflects their skills, knowledge, and cognitive orientation (e.g., Barker and Mueller [6]). Studies of CEO tenure as a determinant of innovation provide mixed results. Some studies fail to find a significant relationship between CEO tenure and R&D spending (e.g., Barker and Mueller [6]; Daellenbach et al. [39]), while others document either a negative relationship (Balsmeier and Buchwald [4]) or an inverted U-shaped relationship (Chen [29]). Previous research has often argued that managers with no tenure in the organization (i.e., newly appointed managers) are better able to induce key strategic changes (Hambrick and Fukutomi [70]). For example, newly appointed managers from outside the organization lack an affinity to the status quo, which can spur them to enter new markets through the development of new products (Westphal and Fredrickson [157]). Indeed, new CEOs tend to learn from and adapt to external environments by leveraging diverse market and customer-related information sources and championing product innovations (Luo et al. [107]). Consistent with this, Kor ([96]) finds that the R&D intensity is greater for firms with CEOs with lower tenure.

As tenure increases, CEOs' receptivity to strategic changes declines (Henderson et al. [75]). At intermediate levels of tenure, for example, CEOs are less willing to assume risks and are constrained by prior successful routines, and as a result, they are less willing to invest in R&D (Chen [29]). With ongoing tenure, CEOs gain knowledge and experience, securing the reliance of shareholders, and thus may be able to initiate innovative projects (Balsmeier and Buchwald [4]). Simsek ([136]) documents that CEO tenure indirectly influences performance through its direct influence on TMT risk-taking propensity and the firm's pursuit of entrepreneurial initiatives. Boeker ([14]) finds that TMT tenure is positively associated with higher levels of strategic change. These arguments support a U-shaped relationship. Thus:

P8a:

CEO tenure has a U-shaped relationship to innovation.

CEOs early in their tenure tend to learn rapidly and are willing to take risks for superior payoffs. By examining a sequence of nested models, Simsek ([136]) finds that CEO tenure improves firm performance measured through metrics such as increases in cash flows and growth in market share, but not stock returns. Thus, prior research has not assessed the impact of CEO tenure indirectly through innovations on stock returns.

Regarding the direct effect, CEOs with shorter tenure have greater firm performance improvements than CEOs with longer tenure (Huson et al. [82]); the increases in cash flows stem from the improved managerial quality of such CEOs. Huson et al. ([81]) document that outside appointments are associated with a more positive stock market reaction, possibly due to outside CEOs' willingness to take actions that may result in higher cash flows; however, such willingness may also increase cash flow volatility. Specifically, increased risk taking by CEOs increases cash flows but increases the volatility of cash flows in the short run, eventually leading to stable cash flows and better stock performance. In between short and long tenure, CEOs are caught in the middle, just as they are for innovation (P8a). Thus, whereas Wang et al. ([152]) find that stock returns have a linear relationship to CEO tenure, we expect a U-shaped direct relationship, with CEOs with both short and long tenure obtaining higher stock returns than CEOs with a medium tenure. Thus:

P8b:

CEO tenure has a U-shaped direct relationship to stock returns.

Functional expertise

Management researchers have widely discussed the influence of an executive's career path on his or her decision making (e.g., Barker and Mueller [6]; Brower and Nath [19]). For example, Dearborn and Simon ([41]) argue that experience with the goals, rewards, and methods of a functional area leads managers to perceive and interpret information in ways that suit and reinforce their functional training.

TMT functional diversity has a positive effect on a firm's innovation orientation and outcome (Barker and Mueller [6]; Talke et al. [145]). Prior research examining the relationship between CEOs' functional background and performance shows that those with experience in "output" functions, including marketing, R&D, product design, and sales, put greater emphasis on growth-oriented actions such as those involving new opportunities, because they better appreciate the value of such actions (Hambrick [69]). Compared with CEOs with "throughput" experience (e.g., accounting, finance, production, administration, legal), CEOs with output experience are better able to envision how to exploit related innovation resources to gain competitive advantage in product markets (Saboo et al. [131]). In marketing, Boyd and Kannan ([16]) find that the percentage of a CEO's functional expertise in marketing influences stock returns from third parties for product excellence. Brower and Nath ([19]) show that appointing a CEO with a marketing background is directly associated with increasing market orientation in the firm. Whitler et al. ([159]) find that marketing-experienced board members positively affect firm-level revenue growth. By contrast, CEOs with experience in throughput functions put greater emphasis on cost-reduction strategies to yield efficiency gains (Hambrick and Mason [71]) than on growth through innovations. Therefore, ceteris paribus, we propose the following:

P9:

CEO output functional expertise is positively related to innovation.

Marketing scholars have largely focused on the influence of CMOs on firm performance (e.g., Feng et al. [52]). Boyd et al. ([17]) find that when the CMO has greater role-specific experience, the negative effect of customer power on firms' market value is lower. Wang et al. ([151]) document a U-shaped relationship between CMO experience and abnormal returns. Focusing on CEOs' experience, Saboo et al. ([131]) find that their output experience (related to marketing, sales, and R&D functions) in acquisition contexts moderates the stock return impact for the firm. Considering that the only study to address the relationship between CEO output experience and stock returns focuses on its moderating role, we do not propose a main effect hypothesis here.

There is a gap in the literature across the three domains of finance, management, and marketing on the important question whether CEOs' functional expertise, associated with innovation output, is positively related to stock returns. Warren et al. ([154]) try to fill this gap in the literature by linking CEO marketing (vs. other functional) expertise to both innovations and patents and, more important, by assessing the subsequent stock market impact on appointments of CEOs with marketing expertise and subsequent firm innovation output.

CEO compensation

Compensation is directly under a firm's control and thus is critical in directing CEO behavior, according to findings from agency theory literature. Indeed, among the four categories of variables discussed, compensation is most closely connected with firm cash flows and residual values, as future compensation is often tied to these metrics.

Several studies have noted the positive relationship between long-term incentive-based compensation and various facets of firm innovation. For example, Bulan and Sanyal ([20]) show that the granting of stocks and stock options to executives is associated with higher levels of patenting activity, which can increase cash flows and improve the residual value of the firm (Hall et al. [68]). Lerner and Wulf ([102]) advance this idea by demonstrating that not only are more long-term incentives related to higher patenting activity, but the patents generated are also cited more heavily and are more original, with positive impacts on cash flows and firm residual value (Pauwels et al. [123]). Most of these studies are based on the theory that innovation is a risky activity with a long gestation period and therefore needs an incentive structure that rewards decision making on a similar time frame. Furthermore, the rewards from patenting and innovation often accrue over time, and therefore a CEO with a longer outlook is more likely to invest in these activities. Table 4 provides an overview of research findings linking CEO compensation to innovation and stock returns.

P10a:

CEO long-term incentive-based compensation is positively related to innovation.

CEO compensation and stock returns: Overview of findings

Characteristic	Illustrative article	Explanatory variables operationalization	Focal variable operationalization	Findings
Long-term incentives	Bulan and Sanyal (2011)	Share price sensitivity; volatility sensitivity	Patent counts; cite-weighted patent counts	Positive relationship between firm patenting activity and stock and option grants.
Long-term compensation	Lerner and Wulf (2007)	Log of total comp; ratio of long-term comp to total comp	Patent citations; originality	More long-term incentives associated with more heavily cited patents, more patent awards, and more original patents.
CEO pay post-Sarbanes Oxley	Sigler and Carolina (2011)	Log of total CEO comp	ROE	Positive and significant relationship between CEO compensation and ROE.
Type of compensation	Mehran (1995)	% of total comp in grants of new stock; % of equity-based comp; % of comp in salary + bonus	Tobin's q and ROA	Performance is positively related to proportion and amount of equity-based comp, rather than total level of comp.
Changing CEO compensation mix	Cheng and Farber (2008)	Ratio of dollar value of options to total comp; number of option grants to total shares outstanding	ROA	Decrease in option-based comp reduces CEOs incentives to make excessively risky investments, leading to profit improvements.
CEO pay	Chang et al. (2010)	CEO prior pay (when CEO departure happened)	Firm value	Better prior performance, higher prior pay, and a more negative stock market reaction are associated with worse post-departure firm performance.
Long-term compensation	Frydman and Saks (2010)	Annual pay from COMPUSTAT	Firm real rate of return	The median real value of comp was flat between 1936 and 2005, revealing a weak relationship between pay and firm growth.
Long-term compensation	Luo et al. (2012)	Percentage of stock options and restricted stock grants to total comp	Market capitalization	Increases in the proportion of CEOs' equity-based comp positively influence firm value.
Compensation	Morse et al. (2011)	Power Index, Insider%, %Appointed	Accounting returns, stock returns, operating EPS	Rigging of incentive pay is associated with a decrease in future firm performance and value.
Total compensation	Bebchuk et al. (2011)	CEO pay slice (CPS)	Tobin's q, ROA, acquirer returns, opportunistic timing of option grants, abnormal returns	Cross-sectional differences in CPS are associated with lower Tobin's q, lower accounting profitability, less favorable market reaction to acquisition announcements, more opportunistic timing of CEO option grants, more luck-based CEO pay, less CEO turnover, and lower stock market returns.
CEO pay	Carpenter and Sanders (2002)	CEO pay and TMT pay	Firm performance, ROA, and Tobin's q	CEO pay is related to TMT pay; TMT comp, in turn, predicts performance (i.e., ROA and Tobin's q) when aligned with shareholder interests and internal contingencies. The effect of CEO pay on future firm performance is dependent on top team pay.

Beyond innovation, several studies link CEO compensation to various firm performance metrics, primarily through the increase and acceleration of cash flows. Sigler and Carolina ([134]) find an overall positive relationship between CEO total compensation and firm performance, as measured by ROE. Earlier studies have consistently demonstrated that the type of compensation CEOs receive is more indicative of firm performance than the total amount of compensation. For example, Mehran ([110]) finds that the proportion of equity compensation, and not total compensation, is what drives firm value. The key dependent variables used in this study are Tobin's q and ROE, highlighting the role of compensation in enhancing residual value and increasing and accelerating cash flows. Finally, Chang et al. ([28]) use a unique technique to tease out the impact of CEOs and their compensation on firm performance: CEO departure. They find that stock returns are negatively related to the firm's prior performance and CEO pay when that CEO departs. They therefore claim that the hypothesis that purely non–CEO-related factors drive changes in firm performance can be rejected.

Accounting for the simultaneity between firm value and CEO compensation, Lilling ([103]) finds a robust relationship to changes in the firm's market value. Examining the 1936–2005 period, Frydman and Saks ([58]) find a weak relationship between CEO compensation and stock returns. They propose that the stronger relationship in the last 30 years derives from the strong alignment of TMT compensation with shareholder incentives over time.

Research has also investigated other contingent factors that may affect the compensation–performance relationship. Luo et al. ([106]) find that increasing the ratio of CEO compensation derived from long-term elements is associated with an increase in customer satisfaction, which in turn leads to positive stock returns. Relatedly, O'Sullivan and McCallig ([121]) demonstrate that increased earnings moderate the customer satisfaction–firm value relationship. Morse et al. ([115]) find that powerful CEOs often rig their own compensation, and a one standard deviation increase in pay due to rigging is associated with a subsequent reduction in stock returns of 4.8%. Disparity of pay among TMT members has a detrimental effect on returns, especially in high-tech industries (Siegel and Hambrick [133]), a finding confirmed by Bebchuk et al. ([7]). This effect is more pronounced when the TMT group is comparable in terms of skills, experience, and other comparable dimensions, which stimulates social comparisons (Fredrickson et al. [57]). Relatedly, Carpenter and Sanders ([26]) show that CEO pay is related to TMT pay, which in turn is related to firm performance.

Bansal et al. ([5]) provide boundary conditions for the effect of equity compensation, by demonstrating that deviation from market-based compensation negatively affects various metrics of firm performance, including ROA and annual stock returns. The literature thus lends strong support to the idea that equity-based, long-term compensation schemes, for both CEOs and CMOs, work to improve stock returns. Thus:

P10b:

CEO long-term incentive-based compensation has a direct positive relationship to stock returns.

Thus far, research in this area has not provided much insight into the path connecting compensation with stock returns through its impact on innovation. An exception is Cheng and Farber ([30]), who find that a reduction in the amount of variable (option-based) compensation offered to CEOs leads them to make fewer very risky decisions (e.g., radical innovations), in turn leading to increases in stock returns, probably through a reduction in cash flow volatility. This study therefore hints at an inverse relationship to that proposed previously—long-term incentives are associated with more risky innovations and lower stock returns. However, the lack of other corroborating studies prevents us from generalizing this finding into a proposition.

Overall, we observe an abundance of research on CEO characteristics and their impact on firm performance, but several inconclusive results remain. By contrast, research on CMOs suffers from a scarcity of studies on their characteristics, their effects on innovation, and firm performance. Next, we review the limited extant findings on CMOs and then offer directions for future research on (1) CEOs, highlighting the need to resolve some conflicting findings and to provide a meta-analysis, and (2) CMOs, calling for studies that build a knowledge base similar to that on CEOs.

CMO characteristics and innovation/stock returns

Our study of this literature also revealed that, compared with CEOs, research on CMOs and their impact on firm performance is relatively limited. Nascent literature in marketing has focused on the presence of a CMO in a firm and its relationship to firm performance (see, e.g., Table 1 in Nath and Mahajan [119]; Wiedeck and Engelen [160]). While early evidence is mixed, recent research finds that CMO presence improves firm performance (e.g., Germann et al. [60]; Nath and Bharadwaj [118]). In terms of CMO characteristics, Table 5 summarizes the early research similar to that for the CEO variables discussed previously.

CMO characteristics and stock returns: Overview of findings

Characteristic	Illustrative article	Explanatory variable operationalization	Focal variable operationalization	Findings
Demographics
Education	Wang et al. (2015)	MBA degree	Abnormal returns	CMO's MBA degree is positively associated with firm's abnormal stock returns.
Education	Homburg et al. (2014)	MBA degree	Venture capital funding	CMO's MBA degree is positively related to the likelihood of funding.
Experience
Tenure	Wang et al. (2017)	Length of time executives have been involved in their current firm's strategies and activities	Tobin's q	A central network position in a CMO's mobility network (information reach) is positively associated with firm performance if CMO tenure is high.
Tenure	Wang et al. (2015)	Total number of years the new CMO has worked in any position or organization before taking the new position	Abnormal returns	The relationship between CMO experience and firm's abnormal stock returns is U shaped.
Role-specific experience/firm-specific experience	Boyd et al. (2010)	Appointee has past experience as a CMO and with appointing firm	Abnormal stock returns	The abnormal stock return when a firm faces high customer power is higher if the appointed CMO has past CMO experience; returns from a CMO appointment when a firm faces high customer power are lower if the appointee has past experience working for the appointing firm.
Functional experience	Homburg et al. (2014)	Marketing experience: number of years in marketing-related jobs Industry experience: number of years the executive has worked in the respective industry	Venture capital funding	CMO marketing and industry experience are positively related to the likelihood of funding.
Compensation
Compensation	Bansal et al. (2016)	Deviations in CMO compensation	ROA; stock returns	Deviations from CMO's predicted compensation is negatively related to firm performance.
Equity incentive	Kim et al. (2016)	CMO equity incentive	Market value	Greater equity incentives allocated to CMO are positively related to firm value.

With respect to demographics, Wang et al. ([151]) find that CMOs with MBA degrees increase abnormal stock returns. They argue that management education enhances the CMO's ability to build and integrate organizational resources and competencies that increase cash flows and, thus, firm performance. Likewise, Homburg et al. ([78]) find that CMOs with an MBA educational background conform to investors' cognitive expectations of marketing capabilities, which results in a higher likelihood of venture capital funding.

Research has also investigated the impact of CMO experience and tenure. The accumulated CMO knowledge of informational tasks gives investors "the comfort of knowing the firm is being led by those who have done it before" (Cohen and Dean [36], p. 686). Wang et al. ([152]) find that as CMO tenure increases, the positive relationship of information reach with stock returns grows stronger, implicitly indicating lower cash volatility. In a similar vein, Boyd et al. ([17]) find that when the CMO has greater role-specific experience, the negative effect of customer power on the firm's market value is lower. Examining nonlinear effects, Wang et al. ([151]) document a U-shaped relationship between CMO tenure and abnormal returns, arguing that past marketing experience endows CMOs with tacit knowledge and strategic insights that enable them to enrich the organization with fresh perspectives early in their tenure, resulting in improved cash flows and higher firm residual value.

Research has paid little attention to how CMO personality and incentives affect stock returns or innovation activities. Two notable exceptions are Kim et al. ([93]), who demonstrate that CMO equity compensation has an impact on firm value over and above that of other TMT members and that the CMO's strategic discretion moderates this relationship, and Fabrizi ([49]), who ties CMO equity incentives to Tobin's q.

In summary, research on CMO personality, demographics, experience, and compensation is sparse, especially when compared with the wealth of knowledge on these factors for CEOs. We use the gaps in the literature to motivate an agenda for future research.

Future research agenda

Future research on CEO characteristics and innovation/stock returns

As we discussed, research on CEO factors and their impact on various measures of firm outcomes abounds (for a summary of propositions, see Table 6). Despite this, further research is required in the area to resolve the conflicting findings. In the following subsections, we document the most promising avenues, based on our review of extant literature.

Summary of propositions on how CEO characteristics affect innovation and stock returns

Characteristics	Variable	Propositions
Personality
Overconfidence	Innovation	P1a: CEO overconfidence is positively related to innovation.
	Stock returns	P1b: CEO overconfidence has an indirect positive relationship to stock returns through innovation.
		P1c: CEO overconfidence has a direct negative relationship to stock returns.
Sensation seeking	Innovation	P2a: CEO sensation seeking is positively related to innovation.
	Stock returns	P2b: CEO sensation seeking has an indirect positive relationship to stock returns through innovation.
Military background	Innovation	P3a: CEO military background is negatively related to innovation.
	Stock returns	P3b: CEO military background has an indirect negative relationship to stock returns through innovation.
Political ideology	Innovation	P4a: CEO liberal ideology is positively related to innovation.
	Stock returns	P4b: CEO liberal ideology has an indirect positive relationship to stock returns through innovation.
Demographics
Age	Innovation	P5a: CEO age is negatively related to innovation.
	Stock returns	P5b: CEO age has a U-shaped relationship to stock returns, partially mediated by innovation.
Education	Innovation	P6a: Both CEO education level and MBA degree are positively related to innovation.
	Stock returns	P6b: Both CEO education level and MBA degree have a direct positive relationship to stock returns.
Gender	Innovation	P7a: Female CEOs are positively associated with innovation.
		P7b: Female CEOs are negatively associated with innovation.
	Stock returns	P7c: Female CEOs have a direct positive relationship to stock returns.
		P7d: Innovation strengthens the positive relationship between female CEOs and stock returns.
		P7e: Female CEOs have a direct negative relationship to stock returns.
Experience
Tenure	Innovation	P8a: CEO tenure has a U-shaped relationship to innovation.
	Stock returns	P8b: CEO tenure has a U-shaped direct relationship to stock returns.
Functional expertise	Innovation	P9: CEO output functional expertise is positively related to innovation.
Compensation
Long-term incentive-based compensation	Innovation	P10a: CEO long-term incentive-based compensation is positively related to innovation.
	Stock returns	P10b: CEO long-term incentive-based compensation has a direct positive relationship to stock returns.

Future research on CEO personality

We note three main areas for future research on CEO personality. First, mixed findings have emerged for several personality characteristics, revealing a need for investigating the conditions under which the effect is negative versus positive. Srivastava et al. ([139]) framework is helpful in this regard, as researchers may propose and find different effects of CEO personality on, for example, cash flow acceleration, size, and volatility. Second, we document an indirect positive effect of overconfidence (P1b) and a direct negative effect of overconfidence on stock returns (P1c), and the net impact of these could result in an intuitively appealing inverted U-shaped relationship, which needs to be investigated. Third, the interactions among the personality characteristics arouse rich conceptual and empirical puzzles. For example, what happens when a CEO with a military background is overconfident?

Future research on CEO demographics

We provide several future research directions for CEO demographics. First, the conflicting findings regarding the relationship between gender and innovation/stock returns suggest that there are key unmeasured mediators or moderators that explain the differences. For example, how does product category (e.g., product vs. service) or consumer segment (e.g., gender, consumption habits) affect the CEO gender–stock returns relationship? Second, CEOs' social media profiles and activities (e.g., Tweets) are important components of their personal brand, and thus their financial impact cannot be ignored. Future research could explore whether the CEOs' digital activities interact with their demographics to influence cash flows and firm performance. Third, as discussed previously, we expect CEO sensation seeking is positively associated with innovation. Also, as noted, research in psychology/economics shows that women are more risk averse than men (Bernasek and Shwiff [10]; Byrnes et al. [21]). Thus, for example, is the effect of sensation seeking on innovation greater for female CEOs than their male counterparts?

Future research on CEO experience

Again, a gap exists in the literature on whether CEO marketing functional expertise is associated with innovation and stock returns. Warren et al. ([154]) link CEO marketing versus other functional expertise (e.g., finance) to innovation and assess the subsequent stock market impact on such CEO appointments and their subsequent innovation output, representing an important step in addressing this research gap. A key contribution of that study is that it disentangles the effects of the announcement of patents filed by the firm and its innovation output.

Also pertaining to CEO experience, the variables of CEO networks and CEO duality (e.g., in which the CEO is also on the board of directors) and their relationships to innovation and stock returns need to be investigated. Networks offer personal connections that increase a CEO's access to relevant information on current market opportunities, which helps increase cash flows and firm performance, making this an important variable. Regarding duality, Adams et al. ([1]) find that firm performance becomes more variable as decision-making power becomes more centralized in the hands of the CEO with role duality. Hauser ([72]) shows that a reduction in board appointments (generated by mergers) is associated with increased cash flows from higher operating profits and higher stock returns. While the former article concludes that firms with powerful CEOs (with dual roles) are not only those with the worst performance but also those with the best performance, the latter provides evidence that role duality is detrimental to firm performance. Further research is clearly necessary to resolve these differences.

Future research on CEO compensation

The findings from CEO compensation research are more consistent than those from the other areas (specifically, the positive impact of long-term compensation). Yet several avenues for future research abound. For example, scholars need to pay more attention to the various types of long-term compensation and the differential impact thereof, as these factors relate to both cash flows and residual firm value. Relatedly, researchers need to better understand the boundary conditions for long-term compensation. Specifically, under what conditions (perhaps related to personality or demographics) does such compensation work better in driving cash flows and firm stock performance?

Finally, a great deal of negative attention has been paid to CEO compensation in recent years. It would be fruitful to investigate (1) the impact of such coverage on the compensation mix itself and (2) whether such negative coverage changes CEO behavior enough to have an impact on innovation and stock returns.

Furthermore, we previously argued that CEO characteristics can be linked to stock returns directly (i.e., without an effect on innovations by relying on investors' cash flow expectations), particularly the prospect of increasing and accelerating future cash flows, reducing associated risks, and increasing residual value (Srivastava et al. [139]). We call for research that empirically examines how CEO characteristics influence each of the four mechanisms to further illuminate the direct stock return impact.

In addition, future research could explore more generally how patent announcements and subsequent innovation differently affect stock returns, as not all patents lead to product commercialization. From an overall perspective, we also call for research to investigate whether and how industry factors (e.g., concentration, volatility, technology) moderate the four CEO characteristics studied and whether they aid in resolving conflicting findings in current studies. For example, younger CEOs may help increase stock returns more in high-tech industries, while older CEOs may do so more in low-tech industries. Thus, despite the vast literature on CEO characteristics and their impact, several opportunities exist to contribute in this area, as outlined here. By contrast, the literature on CMO characteristics is limited, and therefore we propose a fresh agenda for future research based on what we learned from our review of existing CEO literature.

Future research on CMO characteristics and innovation/stock returns

Future research on CMO personality

While we expect many of the findings on CEO personality to hold up for CMOs, a key challenge to future research is the efficient measurement of such characteristics across many firms. For example, it may not be feasible to collect CMO personal financial decisions—specifically, whether they exercise fully vested stock options—as a proxy for overconfidence, as Malmendier and Tate ([108]) do for CEOs. We propose using natural language processing of publicly available information of CMOs' statements (see Winkler et al. [162] for a recent application). Recent research has applied Linguistics Inquiry and Word Count to the 2016 U.S. presidential debates (Bond et al. [15]; Jordan and Pennebaker [85]). Cognitive and emotional processes, such as overconfidence and sensation seeking, appear especially suitable for such analysis, which in our opinion may yield more accurate metrics than the accounting proxies used for CEOs in previous literature.

Moreover, most of the propositions on the impact of CEO personality on innovation and stock returns are similar for CMO personality, at least insofar as the CMO has sufficient power on the board to (partly) drive innovation and other strategic decisions affecting stock returns (Webster Jr. et al. [155]). Thus, future research should pay special attention to the roles of the CMO and other board members in the firm's innovation and value-creating strategies (Verhoef and Leeflang [149]; Webster Jr. et al. [155]).

For a few characteristics, our CMO impact expectations differ from our CEO propositions, given the marketing background of CMOs (Pauwels [122]). For example, training small firm managers in marketing versus finance may result in a growth focus instead of an efficiency focus (Anderson et al. [2]). Therefore, we would expect CMOs to be more sensation seeking than executives with a financial background. Starting from such a high baseline, the relationship between CMO sensation seeking and stock returns may show diminishing returns and even an inverted U shape by itself. Moreover, a match between CMO and CEO characteristics is likely to improve innovation output and stock returns, while a mismatch (e.g., a sensation-seeking CMO and a conservative CEO) is likely to suppress firm performance.

Future research on CMO demographics

Among the demographic factors in our framework, extant CMO research has mainly focused on the link between education and firm performance. As such, topics on other demographics could be explored further. For example, while the review of the CEO gender–innovation/stock returns relationship shows substantial controversies, our expectation for female CMOs is more unanimous given the fit between women's unique traits and CMO responsibilities. Research shows that, in general, female leaders have better communication skills, a more cooperative leadership style, and better understanding of consumer behavior and customers' needs than their male counterparts (Brennan and McCafferty [18]; Wood et al. [163]). This is consistent with the key responsibilities of the CMO to represent and communicate a company's objectives and values both internally and externally. Regarding more recent growth drivers, such as digital transformation, Forbes reports that more than half the world's top-50 most influential CMOs, who are the best at driving transformational change within and outside their organizations, were female (Rooney [129]). Future research could investigate whether and how female CMOs may increase cash flows and reduce cash flow volatility, thus increasing stock returns. Moreover, how do firm- and industry-specific contextual variables (e.g., firm size, firm age, technology intensity, industry life cycle, industry competition) moderate these relationships?

Furthermore, the synergies of CEO and CMO are important topics that lack research efforts. The right CEO–CMO team can be one of the most powerful forces for positive change and growth of a company (Maycotte [109]). Prior research has shown that CEOs prefer to work with demographically (e.g., gender, age, educational background) similar individuals, who are more likely to support their leadership and decision making (Kaczmarek et al. [87]; Ke et al. [91]; Westphal and Zajac [158]). However, executives from different backgrounds may bring different perspectives into decision making, potentially improving firm performance (Finkelstein et al. [55]; Hambrick and Mason [71]). Future research could provide insights on the optimal CEO–CMO pairings in terms of demographic characteristics that drive the most innovation and stock returns.

Future research on CMO experience

Our review indicates that most studies have focused on the presence of the CMO and its impact on firm stock performance, leaving open a range of potential questions for future research. Academics and practitioners have long lamented that marketing is losing its seat at the table, with low average CMO tenure (~23 months) often being offered as evidence. We expect that newly appointed CMOs (i.e., those with low tenure) will focus on functions such as marketing communications and pricing because they do not yet have the political capital to start big innovation projects. Over time, CMOs may gain such capital and be able to choose more products from the firm's NPD pipeline that have the potential to succeed. Longer tenure of the CMO fosters tacit knowledge, which is conducive to innovation (Homburg et al. [78]; Lam [98]) and indicative of a linear relationship between CMO tenure and innovation. As tenure increases, the CMO should gain a better appreciation of the risk–return tradeoff in the firm, leading to stronger investor returns. In addition, CMO tenure should positively affect the marketing capabilities of an organization; additional research is necessary on the interplay between the firm's marketing capabilities and CMO tenure and their effects on innovations and stock returns.

Regarding functional expertise, we expect that all CMOs have functional expertise in marketing, but its extent varies among them. They should be able to adapt to external environments by leveraging diverse market- and customer-related information sources and championing product innovations (Chaganti and Sambharya [27]). Future research could investigate the effect of CMOs' differential functional expertise in value creation (e.g., innovations, new product development), value communication (e.g., marketing communications), and value capture activities (e.g., pricing, customer relationship management) on innovation and stock return (Homburg et al. [79]). For example, CEOs with brand management expertise may be uniquely qualified to build differentiated brands that can increase the equity of the brands owned by the firm and, thus, the firm's residual value (Srivastava et al. [139]).

Future research on CMO compensation

CMOs drive critical value creation (R&D) and value appropriation (advertising) decisions, so their compensation design is likely to have an impact on cash flows and firm residual value. As noted, marketing literature has paid scant attention to these issues thus far. Given that compensation details are available with relative ease, researchers could compare how the various elements of pay structure for CMOs affect firm innovation and stock returns and how these relationships compare with CEOs. CMOs may have a greater impact on firm innovation because they are closer to innovation-related decision making than CEOs, while the impact on stock returns may be weaker, as their impact may be mediated via CEO decisions. The former relationship may demonstrate decreasing returns if CMOs have limited control over innovation even when motivated by the right compensation schemes. Along these lines, what is the impact of CMO pay structure, CEO tenure, and the types and riskiness of innovation undertaken (incremental vs. radical)? We anticipate a relationship in which the level of risk taking is related to the amount of variable, long-term compensation CMOs receive. With CEO tenure, we may find a nonlinear interaction effect with compensation, in line with the main effect of tenure on innovation.

It is clear that CMO compensation interacts with personal and demographic characteristics to affect innovation and stock returns. We expect, for example, that education and gender will interact with compensation elements to modify CMO risk appetites and thereby relate to both innovation and stock returns. Similarly, intrinsic characteristics such as overconfidence or sensation seeking may interact with compensation. Finally, the interaction between compensation and experience could affect innovation and stock returns, perhaps even nonlinearly. As tenure has a U-shaped relationship to innovation, the interaction with compensation may also produce a U-shaped response.

Managerial implications

Our research suggests several implications for practice. First, our findings offer implications for boards of directors and CEOs. To begin with, board members responsible for the selection of CEOs need to recognize that personality, demographics, and experience are key factors in driving critical firm performance metrics such as innovation and stock returns. Boards of directors need to be cognizant that characteristics such as overconfidence, military background, political ideology, and gender may affect not just decision making but also innovation output and shareholder returns. As a recent Wall Street Journal article (Stoll [141]), quoting David Larcker states, "Boards have to consider whether the same thing that made that person a successful CEO, for instance, also led them to engage in highly risky hobbies."

Second, TMT compensation in terms of how much executives are paid has been a relentless focus of the press and the public. We argue that how they are paid is far more important in driving innovations and shareholder value. For boards of directors, this review therefore offers insights into how to create incentives (e.g., by offering long-term, incentive-based compensation) that make it in the TMT's best interests to do what is in shareholders' best interests. An interesting twist in this regard would be the differential use of compensation for different TMT members. For example, in situations in which firms want to play a defensive strategy, CMOs may be compensated with higher fixed pay to reduce risk taking through innovation, while CEOs are compensated to increase stock returns through greater long-term pay.

Finally, investors and analysts need to pay attention to TMT characteristics to help them understand future cash flows and firm performance. To the extent that they correctly anticipate these characteristics' impact on firm value (a key question for future research), they can incorporate their effects in the future value of the firm, in which case abnormal stock returns would only occur in the face of new information (e.g., the announcement of a new TMT member or the public discovery of a previously unknown characteristic of an existing TMT member). The factors discussed previously may provide investors with information about innovation, cash flows, and even stock performance, over and above what may be available through the usual channels.

Conclusion

In this article, we comprehensively review the substantial and diverse body of research on how CEO/CMO characteristics (i.e., personality, demographics, experience, and compensation) affect innovation and stock returns for firms to propose "what we know" about the relationship and to provide future research directions on "what we need to know" for CEOs and CMOs. Bridging multiple streams, future research could substantively enrich the marketing literature, and we hope our study inspires more work on this topic in marketing.

Acknowledgements

The authors are grateful to the JAMS editors, AE and reviewers for their insightful comments and helpful suggestions. They also thank the seminar participants at the JAMS Thought Leaders conference on Generalizations in Marketing at Norwegian Business School (BI Oslo) and at the AMA Sheth Doctoral Consortium in Leeds.

Electronic supplementary material

Graph: (DOCX 91 kb)

Graph: (DOCX 2321 kb)

Publisher's note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

1 Adams RB, Almeida H, Ferreira D. Powerful CEOs and their impact on corporate performance. The Review of Financial Studies. 2005; 18; 4: 1403-1432. 10.1093/rfs/hhi030 2 Anderson SJ, Chandy R, Zia B. Pathways to profits: The impact of marketing vs. finance skills on business performance. Management Science. 2018; 64; 12: 5461-5959. 10.1287/mnsc.2017.2920 3 Avrahami Y. The effect of combat service and military rank on entrepreneurial careers: The case of Israeli MBA graduate. Journal of Political and Military Sociology. 2003; 31; 1: 97-118 4 Balsmeier B, Buchwald A. Who promotes more innovations? Inside versus outside hired CEOs. Industrial and Corporate Change. 2014; 24; 5: 1013-1045. 10.1093/icc/dtu020 5 Bansal N, Joseph K, Ma M, Wintoki MB. Do CMO incentives matter? An empirical investigation of CMO compensation and its impact on firm performance. Management Science. 2016; 63; 6: 1993-2015. 10.1287/mnsc.2015.2418 6 Barker VL, Mueller GC. CEO characteristics and firm R&D spending. Management Science. 2002; 48; 6: 782-801. 10.1287/mnsc.48.6.782.187 7 Bebchuk LA, Cremers KM, Peyer UC. The CEO pay slice. Journal of Financial Economics. 2011; 102; 1: 199-221. 10.1016/j.jfineco.2011.05.006 8 Benmelech E, Frydman C. Military CEOs. Journal of Financial Economics. 2015; 117; 1: 43-59. 10.1016/j.jfineco.2014.04.009 9 Bernardo A, Welch I. On the evolution of overconfidence and entrepreneurs. Journal of Economics and Management Strategy. 2001; 10; 3: 301-331. 10.1162/105864001316907964 Bernasek A, Shwiff S. Gender, risk, and retirement. Journal of Economic Issues. 2001; 35; 2: 345-356. 10.1080/00213624.2001.11506368 Bertrand M, Schoar A. Managing with style: The effect of managers on firm policies. Quarterly Journal of Economics. 2003; 118; 4: 1169-1208. 10.1162/003355303322552775 Bhagat S, Bolton B, Subramanian A. CEO education, CEO turnover, and firm performance. Working paper. 2010: Boulder; University of Colorado Boal KB, Hooijberg R. Strategic leadership research: Moving on. Leadership Quarterly. 2001; 11: 515-549. 10.1016/S1048-9843(00)00057-6 Boeker W. Strategic change: The influence of managerial characteristics and organizational growth. Academy of Management Journal. 1997; 40; 1: 152-170 Bond GD, Holman RD, Eggert JAL, Speller LF, Garcia ON, Mejia SC, Rustige R. 'Lyin' ted', 'crooked Hillary', and 'deceptive Donald': Language of lies in the 2016 US presidential debates. Applied Cognitive Psychology. 2017; 31; 6: 668-677. 10.1002/acp.3376 Boyd DE, Kannan PK. (when) does third-party recognition for design excellence affect financial performance in business-to-business markets?. Journal of Marketing. 2018; 82; 3: 108-123. 10.1509/jm.15.0150 Boyd DE, Chandy RK, Cunha M Jr. When do chief marketing officers affect firm value? A customer power explanation. Journal of Marketing Research. 2010; 47; 6: 1162-1176. 10.1509/jmkr.47.6.1162 Brennan N, McCafferty J. Corporate governance practices in Irish companies. Irish Business and Administrative Research. 1997; 18: 116-135 Brower J, Nath P. Antecedents of market orientation: Marketing CEOs, CMOs, and top management team marketing experience. Marketing Letters. 2018; 29; 4: 405-419. 10.1007/s11002-018-9474-5 Bulan L, Sanyal P. Incentivizing managers to build innovative firms. Annals of Finance. 2011; 7; 2: 267-283. 10.1007/s10436-010-0174-2 Byrnes JP, Miller DC, Schafer WD. Gender differences in risk taking: A meta-analysis. Psychological Bulletin. 1999; 125; 3: 367-383. 10.1037/0033-2909.125.3.367 Cain M, McKeon S. CEO personal risk-taking and corporate policies. Journal of Financial and Quantitative Analysis. 2016; 51; 1: 139-164. 10.1017/S0022109016000041 Camelo C, Fernández-Alles M, Hernández AB. Strategic consensus, top management teams, and innovation performance. International Journal of Manpower. 2010; 31; 6: 678-695. 10.1108/01437721011073373 Camerer C, Lovallo D. Overconfidence and excess entry: An experimental approach. American Economic Review. 1999; 89; 1: 306-318. 10.1257/aer.89.1.306 Cannella AA Jr, Monroe MJ. Contrasting perspectives on strategic leaders: Toward a more realistic view of top managers. Journal of Management. 1997; 23; 3: 213-237. 10.1177/014920639702300302 Carpenter MA, Sanders WG. Top management team compensation: The missing link between CEO pay and firm performance?. Strategic Management Journal. 2002; 23; 4: 367-375. 10.1002/smj.228 Chaganti R, Sambharya R. Strategic orientation and characteristics of upper management. Strategic Management Journal. 1987; 8; 4: 393-401. 10.1002/smj.4250080409 Chang YY, Dasgupta S, Hilary G. CEO ability, pay, and firm performance. Management Science. 2010; 56; 10: 1633-1652. 10.1287/mnsc.1100.1205 Chen HL. CEO tenure and R&D investment: The moderating effect of board capital. Journal of Applied Behavioral Science. 2013; 49; 4: 437-459. 10.1177/0021886313485129 Cheng Q, Farber DB. Earnings restatements, changes in CEO compensation, and firm performance. The Accounting Review. 2008; 83; 5: 1217-1250. 10.2308/accr.2008.83.5.1217 Cheng LT, Chan RY, Leung TY. Management demography and corporate performance: Evidence from China. International Business Review. 2010; 19; 3: 261-275. 10.1016/j.ibusrev.2009.12.007 Child J. Managerial and organizational factors associated with company performance-part II. A contingency analysis. Journal of Management Studies. 1975; 12; 1/2: 12-27. 10.1111/j.1467-6486.1975.tb00884.x Chin MK, Hambrick DC, Treviño LK. Political ideologies of CEOs: The influence of executives' values on corporate social responsibility. Administrative Science Quarterly. 2013; 58; 2: 197-232. 10.1177/0001839213486984 Christensen DM, Dhaliwal DS, Boivie S, Graffin SD. Top management conservatism and corporate risk strategies: Evidence from managers' personal political orientation and corporate tax avoidance. Strategic Management Journal. 2015; 36; 12: 1918-1938. 10.1002/smj.2313 Cleeren K, Dekimpe MG, van Heerde HJ. Marketing research on product-harm crises: A review, managerial implications, and an agenda for future research. Journal of the Academy of Marketing Science. 2017; 45; 5: 593-615. 10.1007/s11747-017-0558-1 Cohen BD, Dean TJ. Information asymmetry and investor valuation of IPOs: Top management team legitimacy as a capital market signal. Strategic Management Journal. 2005; 26; 7: 683-690. 10.1002/smj.463 Colicev A, Malshe A, Pauwels K, O'Connor P. Improving consumer mindset metrics and shareholder value through social media: The different roles of owned and earned media. Journal of Marketing. 2018; 82; 1: 37-56. 10.1509/jm.16.0055 Conover PJ, Feldman S. The origins and meaning of liberal/conservative self-identifications. American Journal of Political Science. 1981; 25; 4: 617-645. 10.2307/2110756 Daellenbach US, McCarthy AM, Schoenecker TS. Commitment to innovation: The impact of top management team characteristics. R&D Management. 1999; 29; 3: 199-208. 10.1111/1467-9310.00130 Daily CM, Certo ST, Dalton DR. A decade of corporate women: Some progress in the boardroom, none in the executive suite. Strategic Management Journal. 1999; 20; 1: 93-100. 10.1002/(SICI)1097-0266(199901)20:1<93:AID-SMJ18>3.0.CO;2-7 Dearborn DC, Simon HA. Selective perception: A note on the departmental identifications of executives. Sociometry. 1958; 21; 2: 140-144. 10.2307/2785898 Dezsö CL, Ross DG. Does female representation in top management improve firm performance? A panel data investigation. Strategic Management Journal. 2012; 33; 9: 1072-1089. 10.1002/smj.1955 Doukas J, Petmezas D. Acquisitions, overconfident managers and self-attribution bias. European Financial Management. 2007; 13; 3: 531-577. 10.1111/j.1468-036X.2007.00371.x Dyer J, Gregersen H, Christensen CM. The innovator's DNA: Mastering the five skills of disruptive innovators. 2011: Boston; Harvard Business Press Eagly AH, Johannesen-Schmidt MC, van Engen ML. Transformational, transactional, and laissez-faire leadership styles: A meta-analysis comparing women and men. Psychological Bulletin. 2003; 129; 4: 569-591. 10.1037/0033-2909.129.4.569 Elder GH. Military times and turning points in men's lives. Developmental Psychology. 1986; 22; 2: 233-245. 10.1037/0012-1649.22.2.233 Elder GH Jr, Clipp EC. Combat experience and emotional health: Impairment and resilience in later life. Journal of Personality. 1989; 57; 2: 311-341. 10.1111/j.1467-6494.1989.tb00485.x Elder GH Jr, Gimbel C, Ivie R. Turning points in life: The case of military service and war. Military Psychology. 1991; 3; 4: 215-231. 10.1207/s15327876mp0304_3 Fabrizi M. Chief marketing officer's equity incentives: Economic determinants and effects on shareholder value. European Journal of Marketing. 2014; 48; 9/10: 1757-1781. 10.1108/EJM-09-2012-0552 Faccio M, Marchica MT, Mura R. CEO gender, corporate risk-taking, and the efficiency of capital allocation. Journal of Corporate Finance. 2016; 39: 193-209. 10.1016/j.jcorpfin.2016.02.008 Fama EF. Efficient capital markets: A review of theory and empirical work. Journal of Finance. 1970; 25; 2: 383-417. 10.2307/2325486 Feng H, Morgan NA, Rego LL. Marketing department power and firm performance. Journal of Marketing. 2015; 79; 5: 1-20. 10.1509/jm.13.0522 Finkelstein S, Hambrick DC. Chief executive compensation: A synthesis and reconciliation. Strategic Management Journal. 1988; 9; 6: 543-558. 10.1002/smj.4250090603 Finkelstein S, Hambrick D. Strategic leadership. 1996: St. Paul; West Educational Publishing Finkelstein S, Hambrick DC, Cannella AA. Strategic leadership: Theory and research on executives, top management teams, and boards. 2009: Oxford; Oxford University Press Franke V. Generation X and the military: A comparison of attitudes and values between west point cadets and college students. Journal of Political and Military Sociology. 2001; 29; 1: 92-119 Fredrickson JW, Davis-Blake A, Sanders WG. Sharing the wealth: Social comparisons and pay dispersion in the CEO's top team. Strategic Management Journal. 2010; 31; 10: 1031-1053. 10.1002/smj.848 Frydman C, Saks RE. Executive compensation: A new view from a long-term perspective, 1936–2005. Review of Financial Studies. 2010; 23; 5: 2099-2138. 10.1093/rfs/hhp120 Galasso A, Simcoe TS. CEO overconfidence and innovation. Management Science. 2011; 57; 8: 1469-1484. 10.1287/mnsc.1110.1374 Germann F, Ebbes P, Grewal R. The chief marketing officer matters!. Journal of Marketing. 2015; 79; 3: 1-22. 10.1509/jm.14.0244 Giddens A. Risk society: The context of British politics. The Politics of Risk Society. 1998: Cambridge; Polity Press: 23-34 Goel AM, Thakor AV. Overconfidence, CEO selection, and corporate governance. Journal of Finance. 2008; 63; 6: 2737-2784. 10.1111/j.1540-6261.2008.01412.x Goll I, Sambharya RB, Tucci LA. Top management team composition, corporate ideology, and firm performance. Management International Review. 2001; 41; 2: 109-129 Gottesman AA, Morey MR. Manager education and mutual fund performance. Journal of Empirical Finance. 2006; 13; 2: 145-182. 10.1016/j.jempfin.2005.10.001 Gottfredson LS. The challenge and promise of cognitive career assessment. Journal of Career Assessment. 2003; 11; 2: 115-135. 10.1177/1069072703011002001 Griffin D, Tversky A. The weighing of evidence and the determinants of confidence. Cognitive Psychology. 1992; 24; 3: 411-435. 10.1016/0010-0285(92)90013-R Grund C, Westergård-Nielsen N. Age structure of the workforce and firm performance. International Journal of Manpower. 2008; 29; 5: 410-422. 10.1108/01437720810888553 Hall, B. H, Thoma, G, & Torrisi, S. (2007). The market value of patents and R&D: Evidence from European firms. NBER working paper no 13426. Hambrick DC. Upper echelons theory: An update. Academy of Management Review. 2007; 32; 2: 334-343. 10.5465/amr.2007.24345254 Hambrick DC, Fukutomi GD. The seasons of a CEO's tenure. Academy of Management Review. 1991; 16; 4: 719-742. 10.5465/amr.1991.4279621 Hambrick DC, Mason PA. Upper echelons: The organization as a reflection of top managers. Academy of Management Review. 1984; 9: 193-206. 10.5465/amr.1984.4277628 Hauser R. Busy directors and firm performance: Evidence from mergers. Journal of Financial Economics. 2018; 128; 1: 16-37. 10.1016/j.jfineco.2018.01.009 Hauser J, Tellis GJ, Griffin A. Research on innovation: A review and agenda for marketing science. Marketing Science. 2006; 25; 6: 687-717. 10.1287/mksc.1050.0144 Henderson AD, Fredrickson JW. Information-processing demands as a determinant of CEO compensation. Academy of Management Journal. 1996; 39; 3: 575-606 Henderson AD, Miller D, Hambrick DC. How quickly do CEOs become obsolete? Industry dynamism, CEO tenure, and company performance. Strategic Management Journal. 2006; 27; 5: 447-460. 10.1002/smj.524 Hirshleifer D, Low A, Teoh SH. Are overconfident CEOs better innovators?. Journal of Finance. 2012; 67; 4: 1457-1498. 10.1111/j.1540-6261.2012.01753.x Hoffman LR, Maier NR. Quality and acceptance of problem solutions by members of homogeneous and heterogeneous groups. Journal of Abnormal and Social Psychology. 1961; 62; 2: 401-407. 10.1037/h0044025 Homburg C, Hahn A, Bornemann T, Sandner P. The role of chief marketing officers for venture capital funding: Endowing new ventures with marketing legitimacy. Journal of Marketing Research. 2014; 51; 5: 625-644. 10.1509/jmr.11.0350 Homburg C, Schwemmle M, Kuehnl C. New product design: Concept, measurement, and consequences. Journal of Marketing. 2015; 79; 3: 41-56. 10.1509/jm.14.0199 House RJ, Dorfman PW, Javidian M, Hanges PJ, Sully de Luque M. Strategic leadership across cultures: The GLOBE study of CEO leadership behavior and effectiveness in 24 countries. 2014: Thousand Oaks; Sage Huson MR, Parrino R, Starks LT. Internal monitoring mechanisms and CEO turnover: A long-term perspective. Journal of Finance. 2001; 56; 6: 2265-2297. 10.1111/0022-1082.00405 Huson MR, Malatesta PH, Parrino R. Managerial succession and firm performance. Journal of Financial Economics. 2004; 74; 2: 237-275. 10.1016/j.jfineco.2003.08.002 Hutton I, Jiang D, Kumar A. Corporate policies of republican managers. Journal of Financial and Quantitative Analysis. 2014; 49; 5/6: 1279-1310. 10.1017/S0022109014000702 Jalbert T, Jalbert M, Furumo K. The relationship between CEO gender, financial performance, and financial management. Journal of Business & Economics Research. 2013; 11; 1: 25-34 Jordan KN, Pennebaker JW. The exception or the rule: Using words to assess analytic thinking, Donald Trump, and the American presidency. Translational Issues in Psychological Science. 2017; 3; 3: 312-316. 10.1037/tps0000125 Jost JT, Glaser J, Kruglanski AW, Sulloway FJ. Political conservatism as motivated social cognition. Psychological Bulletin. 2003; 129; 3: 339-375. 10.1037/0033-2909.129.3.339 Kaczmarek S, Kimino S, Pye A. Board task-related faultlines and firm performance: A decade of evidence. Corporate Governance: An International Review. 2012; 20; 4: 337-351. 10.1111/j.1467-8683.2011.00895.x Kalleberg AL, Leicht KT. Gender and organizational performance: Determinants of small business survival and success. Academy of Management Journal. 1991; 34; 1: 136-161 Kashmiri S, Mahajan V. Values that shape marketing decisions: Influence of chief executive officers' political ideologies on innovation propensity, shareholder value, and risk. Journal of Marketing Research. 2017; 54; 2: 260-278. 10.1509/jmr.14.0110 Kashmiri S, Nicol CD, Arora S. Me, myself, and I: Influence of CEO narcissism on firms' innovation strategy and the likelihood of product-harm crises. Journal of the Academy of Marketing Science. 2017; 45; 5: 633-656. 10.1007/s11747-017-0535-8 Ke R, Li M, Ling Z, Zhang Y. Social connections within executive teams and management forecasts. Management Science. 2019; 65; 1: 439-457. 10.1287/mnsc.2017.2925 Khan WA, Vieito JP. CEO gender and firm performance. Journal of Economics and Business. 2013; 67: 55-66. 10.1016/j.jeconbus.2013.01.003 Kim MC, Boyd DE, Kim N, Cheong HY. CMO equity incentive and shareholder value: Moderating role of CMO managerial discretion. International Journal of Research in Marketing. 2016; 33: 725-738. 10.1016/j.ijresmar.2016.09.001 Kimberly JR, Evanisko MJ. Organizational innovation: The influence of individual, organizational, and contextual factors on hospital adoption of technological and administrative innovations. Academy of Management Journal. 1981; 24; 4: 689-713 King T, Srivastav A, Williams J. What's in an education? Implications of CEO education for bank performance. Journal of Corporate Finance. 2016; 37: 287-308. 10.1016/j.jcorpfin.2016.01.003 Kor YY. Direct and interaction effects of top management team and board compositions on R&D investment strategy. Strategic Management Journal. 2006; 27; 11: 1081-1099. 10.1002/smj.554 Krishnan HA, Park D. A few good women—On top management teams. Journal of Business Research. 2005; 58; 12: 1712-1720. 10.1016/j.jbusres.2004.09.003 Lam A. Tacit knowledge, organizational learning and societal institutions: An integrated framework. Organization Studies. 2000; 21; 3: 487-513. 10.1177/0170840600213001 Langer EJ. The illusion of control. Journal of Personality and Social Psychology. 1975; 32; 2: 311-328. 10.1037/0022-3514.32.2.311 Lee PM, James EH. She'-e-os: Gender effects and investor reactions to the announcements of top executive appointments. Strategic Management Journal. 2007; 28; 3: 227-241. 10.1002/smj.575 Lehmann DR. Marketing and organic revenue growth. GFK Marketing Intelligence Review. 2015; 7; 1: 16-21. 10.1515/gfkmir-2015-0002 Lerner J, Wulf J. Innovation and incentives: Evidence from corporate R&D. Review of Economics and Statistics. 2007; 89; 4: 634-644. 10.1162/rest.89.4.634 Lilling MS. The link between CEO compensation and firm performance: Does simultaneity matter?. Atlantic Economic Journal. 2006; 34; 1: 101-114. 10.1007/s11293-006-6132-8 Lin C, Lin P, Song FM, Li C. Managerial incentives, CEO characteristics and corporate innovation in China's private sector. Journal of Comparative Economics. 2011; 39; 2: 176-190. 10.1016/j.jce.2009.12.001 Lin, L, Nguyena, N. H, Zoua, L, & Lic. Y. (2018). Military executives on corporate outcomes: Evidence from China. Working paper. Luo X, Wieseke J, Homburg C. Incentivizing CEOs to build customer- and employee-firm relations for higher customer satisfaction and firm value. Journal of the Academy of Marketing Science. 2012; 40; 6: 745-758. 10.1007/s11747-011-0290-1 Luo X, Kanuri VK, Andrews M. How does CEO tenure matter? The mediating role of firm-employee and firm-customer relationships. Strategic Management Journal. 2014; 35; 4: 492-511. 10.1002/smj.2112 Malmendier U, Tate G. CEO overconfidence and corporate investment. Journal of Finance. 2005; 60; 6: 2661-2700. 10.1111/j.1540-6261.2005.00813.x Maycotte, H. O. (2016). 3 ways to build a strong CEO-CMO relationship. Forbes Retrieved from https://www.forbes.com/sites/homaycotte/2016/01/19/3-ways-to-build-a-strong-ceo-cmo-relationship/#195706a94e8d. Mehran H. Executive compensation structure, ownership, and firm performance. Journal of Financial Economics. 1995; 38; 2: 163-184. 10.1016/0304-405X(94)00809-F Mittelstaedt R, Grossbart S, Curtis W, De Vere S. Optimal stimulation level and the adoption decision process. Journal of Consumer Research. 1976; 3; 2: 84-94. 10.1086/208655 Moore DA, Kim TG. Myopic social prediction and the solo comparison effect. Journal of Personality and Social Psychology. 2003; 85; 6: 1121-1135. 10.1037/0022-3514.85.6.1121 Moreno-Gómez J, Lafuente E, Vaillant Y. Gender diversity in the board, women's leadership and business performance. Gender in Management: An International Journal. 2018; 33; 2: 104-122. 10.1108/GM-05-2017-0058 Morresi O. How much is CEO education worth to a firm? Evidence from European firms. PSL Quarterly Review. 2017; 70; 282: 311-353 Morse A, Nanda V, Seru A. Are incentive contracts rigged by powerful CEOs?. Journal of Finance. 2011; 66; 5: 1779-1821. 10.1111/j.1540-6261.2011.01687.x Myers S, Marquis DG. Successful industrial innovations: A study of factors underlying innovation in selected firms. 1969: Alexandria; National Science Foundation Nadler DA, Heilpern JD. The CEO in the context of discontinuous change. 1998: Boston; Harvard Business School Press Nath, P, & Bharadwaj, N. (2020). Chief marketing officer presence and firm performance: Assessing conditions under which the presence of other C-level functional executives matters. Journal of the Academy of Marketing Science, 1–25. Nath P, Mahajan V. Shedding light on the CMO revolving door: A study of the antecedents of chief marketing officer turnover. Journal of the Academy of Marketing Science. 2017; 45; 1: 93-118. 10.1007/s11747-016-0478-5 Nguyen DD, Hagendorff J, Eshraghi A. Which executive characteristics create value in banking? Evidence from appointment announcements. Corporate Governance: An International Review. 2015; 23; 2: 112-128. 10.1111/corg.12084 O'Sullivan D, McCallig J. Customer satisfaction, earnings and firm value. European Journal of Marketing. 2012; 46; 6: 827-843. 10.1108/03090561211214627 Pauwels K. It's not the size of the data--it's how you use it: Smarter marketing with analytics and dashboards. 2014: New York; American Management Association Pauwels K, Silva-Risso J, Srinivasan S, Hanssens DM. New products, sales promotions, and firm value: The case of the automobile industry. Journal of Marketing. 2004; 68; 4: 142-156. 10.1509/jmkg.68.4.142.42724 Peloza J, Shang J. How can corporate social responsibility activities create value for stakeholders? A systematic review. Journal of the Academy of Marketing Science. 2011; 39; 1: 117-135. 10.1007/s11747-010-0213-6 Peni E. CEO and chairperson characteristics and firm performance. Journal of Management and Governance. 2014; 18; 1: 185-205. 10.1007/s10997-012-9224-7 Prendergast C, Stole L. Impetuous youngsters and jaded old-timers: Acquiring a reputation for learning. Journal of Political Economy. 1996; 104; 6: 1105-1134. 10.1086/262055 Reed R, DeFillippi RJ. Causal ambiguity, barriers to imitation, and sustainable competitive advantage. Academy of Management Review. 1990; 15; 1: 88-102. 10.5465/amr.1990.4308277 Roberti J. A review of behavioral and biological correlates of sensation seeking. Journal of Research in Personality. 2004; 38; 3: 256-279. 10.1016/S0092-6566(03)00067-9 Rooney, J. (2018). CMO next 2018: 50 marketing chiefs who are redefining the role and shaping the future. Forbes. Retrieved September 24, 2018, from https://www.forbes.com/sites/jenniferrooney/2018/09/24/cmo-next-2018-50-marketing-chiefs-who-are-redefining-the-role-and-shaping-the-future/#54235bfbe716. Rubera G, Kirca AH. Firm innovativeness and its performance outcomes: A meta-analytic review and theoretical integration. Journal of Marketing. 2012; 76; 3: 130-147. 10.1509/jm.10.0494 Saboo AR, Sharma A, Chakravarty A, Kumar V. Influencing acquisition performance in high-technology industries: The role of innovation and relational overlap. Journal of Marketing Research. 2017; 54; 2: 219-238. 10.1509/jmr.15.0556 Serfling MA. CEO age and the riskiness of corporate policies. Journal of Corporate Finance. 2014; 25: 251-273. 10.1016/j.jcorpfin.2013.12.013 Siegel PA, Hambrick DC. Pay disparities within top management groups: Evidence of harmful effects on performance of high-technology firms. Organization Science. 2005; 16; 3: 259-274. 10.1287/orsc.1050.0128 Sigler KJ, Carolina N. CEO compensation and company performance. Business and Economics Journal. 2011; 31; 1: 1-8 Simon M, Houghton SM. The relationship between overconfidence and the introduction of risky products: Evidence from a field study. Academy of Management Journal. 2003; 46; 2: 139-140 Simsek Z. CEO tenure and organizational performance: An intervening model. Strategic Management Journal. 2007; 28; 6: 653-662. 10.1002/smj.599 Srinivasan S, Hanssens DM. Marketing and firm value: Metrics, methods, findings, and future directions. Journal of Marketing Research. 2009; 46; 3: 293-312. 10.1509/jmkr.46.3.293 Srinivasan S, Pauwels K, Silva-Risso J, Hanssens DM. Product innovations, advertising, and stock returns. Journal of Marketing. 2009; 73; 1: 24-43. 10.1509/jmkg.73.1.024 Srivastava RK, Shervani TA, Fahey L. Market-based assets and shareholder value: A framework for analysis. Journal of Marketing. 1998; 62; 1: 2-18. 10.1177/002224299806200102 Stock R, Groß M, Xin KR. Will self-love take a fall? Effects of top executives' positive self-regard on firm innovativeness. Journal of Product Innovation Management. 2019; 36; 1: 41-65. 10.1111/jpim.12443 Stoll, John D. (2019). Skydiving, mountain climbing and other ways execs terrify their shareholders. Wall Street Journal. Retrieved June 21, 2019 from. https://www.wsj.com/articles/skydiving-mountain-climbing-and-other-ways-execs-terrify-their-shareholders-11561109403?shareToken=st6708d28f19494df1bd4c2713356d4012. Strohmeyer R, Tonoyan V, Jennings JE. Jacks-(and Jills)-of-all-trades: On whether, how and why gender influences firm innovativeness. Journal of Business Venturing. 2017; 32; 5: 498-518. 10.1016/j.jbusvent.2017.07.001 Strøm R, D'Espallier B, Mersland R. Female leadership, performance, and governance in microfinance institutions. Journal of Banking & Finance. 2014; 42: 60-75. 10.1016/j.jbankfin.2014.01.014 Sunder J, Sunder SV, Zhang J. Pilot CEOs and corporate innovation. Journal of Financial Economics. 2017; 123; 1: 209-224. 10.1016/j.jfineco.2016.11.002 Talke K, Salomo S, Kock A. Top management team diversity and strategic innovation orientation: The relationship and consequences for innovativeness and performance. Journal of Product Innovation Management. 2011; 28; 6: 819-832. 10.1111/j.1540-5885.2011.00851.x Thomas AS, Litschert RL, Ramaswamy K. The performance impact of strategy-manager coalignment: An empirical examination. Strategic Management Journal. 1991; 12; 7: 509-522. 10.1002/smj.4250120704 Unsal O, Hassan MK, Zirek D. Corporate lobbying, CEO political ideology and firm performance. Journal of Corporate Finance. 2016; 38: 126-149. 10.1016/j.jcorpfin.2016.04.001 Van Knippenberg D, de Dreu CK, Homan AC. Work group diversity and group performance: An integrative model and research agenda. Journal of Applied Psychology. 2004; 89; 6: 1008-1022. 10.1037/0021-9010.89.6.1008 Verhoef PC, Leeflang PS. Understanding the marketing department's influence within the firm. Journal of Marketing. 2009; 73; 2: 14-37. 10.1509/jmkg.73.2.14 Wally S, Baum JR. Personal and structural determinants of the pace of strategic decision making. Academy of Management Journal. 1994; 37; 4: 932-956 Wang R, Saboo AR, Grewal R. A managerial capital perspective on chief marketing officer succession. International Journal of Research in Marketing. 2015; 32; 2: 164-178. 10.1016/j.ijresmar.2014.11.001 Wang R, Gupta A, Grewal R. Mobility of top marketing and sales executives in business-to-business markets: A social network perspective. Journal of Marketing Research. 2017; 54; 4: 650-670. 10.1509/jmr.14.0124 Warren NL, Sorescu A. Interpreting the stock returns to new product announcements: How the past shapes investors' expectations of the future. Journal of Marketing Research. 2017; 54; 5: 799-815. 10.1509/jmr.14.0119 Warren, N. L, Sorescu, A, & Srinivasan, S. (2019). Innovation and its stock market valuation: The role of the marketing expertise of the CEO. In Working paper. University of Arizona. Webster FE Jr, Malter AJ, Ganesan S. The decline and dispersion of marketing competence. MIT Sloan Management Review. 2005; 46; 4: 35-43 Weinstein N. Unrealistic optimism about future life events. Journal of Personality and Social Psychology. 1980; 39; 5: 806-820. 10.1037/0022-3514.39.5.806 Westphal JD, Fredrickson JW. Who directs strategic change? Director experience, the selection of new CEOs, and change in corporate strategy. Strategic Management Journal. 2001; 22; 12: 1113-1137. 10.1002/smj.205 Westphal JD, Zajac EJ. Who shall govern? CEO/board power, demographic similarity, and new director selection. Administrative Science Quarterly. 1995; 40; 1: 60-83. 10.2307/2393700 Whitler KA, Krause R, Lehmann DR. When and how board members with marketing experience facilitate firm growth. Journal of Marketing. 2018; 82; 4: 86-105. 10.1509/jm.17.0195 Wiedeck C, Engelen A. The copycat CMO: Firms' imitative behavior as an explanation for CMO presence. Journal of the Academy of Marketing Science. 2018; 46; 4: 632-651. 10.1007/s11747-017-0533-x Wiersema MF, Bantel KA. Top management team demography and corporate strategic change. Academy of Management Journal. 1992; 35; 1: 91-121 Winkler HJ, Rieger V, Engelen A. Does the CMO's personality matter for web traffic? Evidence from technology-based new ventures. Journal of the Academy of Marketing Science. 2020; 48; 2: 308-330. 10.1007/s11747-019-00671-9 Wood W, Polek D, Aiken C. Sex differences in group task performance. Journal of Personality and Social Psychology. 1985; 48; 1: 63-71. 10.1037/0022-3514.48.1.63 Worthy DA, Gorlick MA, Pacheco JL, Schnyer DM, Maddox WT. With age comes wisdom: Decision making in younger and older adults. Psychological Science. 2011; 22; 11: 1375-1380. 10.1177/0956797611420301 Yadav MS, Prabhu JC, Chandy PK. Managing the future: CEO attention and innovation outcomes. Journal of Marketing. 2007; 71; 4: 84-101. 10.1509/jmkg.71.4.084 Yao T. Female force participation in TMT and technological innovation capability. Working paper. 2015: Pomona; California State Polytechnic University Yim S. The acquisitiveness of youth: CEO age and acquisition behavior. Journal of Financial Economics. 2013; 108; 1: 250-273. 10.1016/j.jfineco.2012.11.003 Zahra SA, Pearce JA. Boards of directors and corporate financial performance: A review and integrative model. Journal of Management. 1989; 15; 2: 291-334. 10.1177/014920638901500208 Zhang B, Sun C. An empirical research on the influence of TMT characteristics on R&D investment. Research on Modern Higher Education. 2017; 2: 109-113. 10.24104/rmhe/2017.02.01017 Zhang XA, Li N, Ullrich J, van Dick R. Getting everyone on board: The effect of differentiated transformational leadership by CEOs on top management team effectiveness and leader-rated firm performance. Journal of Management. 2015; 41; 7: 1898-1933. 10.1177/0149206312471387 Zuckerman M. Behavioral expressions and biological bases of sensation seeking. 1994: Cambridge; Cambridge University Press Strategic leadership theorists have defined the term "top management team" as a relatively small group of the most influential executives at the apex of an organization—usually the CEO (or general manager) and those who report directly to him or her (Finkelstein et al.[55]). Stock returns reflect the change in the total value of an investment in a common stock over some period per dollar of initial investment (e.g., Srinivasan and Hanssens [137]) and is operationalized as (Pricet + Dividendt – Pricet – 1)/(Pricet – 1). Innovation refers to the process of bringing new products and services to market (Hauser et al.[73]). We consider both the direct and indirect effect through innovation on stock returns of CEO characteristics (see, e.g., Rubera and Kirca [130]; Srinivasan et al.[138]; Warren and Sorescu [153]; Warren et al.[154]). We do not assume that the stock market immediately and fully incorporates all future cash flows that will derive from a CEO's particular characteristics at the moment his or her appointment is announced. Thus, stock returns may adjust over time as the market processes the implications of various CEO factors. In general, we build our propositions around the idea of semistrong stock market efficiency (Fama [51]), in which the stock market adjusts to all available information, but not instantaneously. Military background can be classified as either a personality or a demographic characteristic. We do not regard military background as a demographic characteristic because it is a former occupation for current CEOs. More important, research has treated military background as a "personality trait" because it is a proxy for conservatism and affects individuals' values, behaviors, and actions (e.g., Benmelech and Frydman [8]).

By Ya You; Shuba Srinivasan; Koen Pauwels and Amit Joshi

Reported by Author; Author; Author; Author