Do powerful chief executives influence the financial performance of UK firms?

Elena Veprauskaite, Mike Adams

Research output: Contribution to journalArticlepeer-review

89 Citations (SciVal)


Drawing on a framework from agency theory, we examine the relation between the decision-making power of Chief Executive Officers (CEOs) and the financial performance of 468 United Kingdom (UK) publicly listed companies (plcs) using a dynamic panel data estimation method for the six years 2003-2008. We measure CEO power using a 'power index' which captures the extent to which the autonomy of the CEO to make unilateral decisions could influence firms' financial performance. To test for robustness, our analysis is conducted using different measures of financial performance. Our results reveal that, consistent with previous UK research, CEO power, as defined by CEO-Chair duality, CEO-tenure and CEO share ownership, is negatively related to financial performance. We also find that concentrated ownership is inversely related to the performance of UK plcs. CEO's compensation and board structure, however, do not appear to be related to the financial performance of the UK plcs.
Original languageEnglish
Pages (from-to)229-241
Number of pages13
JournalBritish Accounting Review
Issue number3
Early online date29 Jun 2013
Publication statusPublished - Sept 2013


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