CEO Centrality

The authors find that CEO centrality is negatively associated with firm value (as measured by industry-adjusted Tobin's Q). Greater CEO centrality is also correlated with lower (industry-adjusted) accounting profitability, lower stock returns accompanying acquisitions announced by the firm and higher likelihood of a negative stock return accompanying such announcements, higher odds of the CEO's receiving a "Lucky" option grant at the lowest price of the month, greater tendency to reward the CEO for luck in the form of positive industry-wide shocks, lower likelihood of CEO turnover controlling for performance, and lower firm-specific variability of stock returns over time. Overall, the results indicate that differences in CEO centrality are an aspect of firm management and governance that deserves the attention of researchers.