Do Chief Executive Officers Matter More in Some Countries than Others? The Antecedents and Consequences of Cross-National Differences in Managerial Discretion

This dissertation examines cross-national differences in the extent to which CEOs matter to firm outcomes. To address this issue, I build on the construct of managerial discretion, or latitude of action. Most research in this domain has focused on the firm-level and industry-level factors that constrain or enable discretion. I extend managerial discretion research by adopting for the first time a broader interpretation of the firms environment the national level in terms of its constraints on discretion. My dissertation consists of two major sections. First, I present a theoretical analysis discussing how cross-national differences in a number of informal institutions (e.g. social norms) and formal institutions (e.g. legal tradition) will differentially affect CEO discretion across countries. I also discuss the importance of institutional enforcement mechanisms and explore the inter-relationships among informal and formal institutions. Second, I present a theoretical and empirical analysis of some of the major consequences of cross-national differences in managerial discretion, including CEO effects, CEO characteristics, and the firm performance-CEO departure relationship. I find evidence that, compared to CEOs in low-discretion environments (e.g. Japan, South Korea), CEOs in high-discretion environments (e.g. U.K., U.S.) tend to be associated with larger CEO effects, earlier CEO entry, more heterogeneous CEO entry and exit, and a greater likelihood of departure following poor performance. I also examine whether the impact of national-level discretion is moderated by firm-level internationalization. Finally, I investigate whether these phenomena have changed significantly over time.