Review of Corporate Finance
This study examines whether chief executive officers (CEOs) are to blame for corporate failures. Using alternative CEO managerial ability measures, we document that high-ability (low-ability) CEOs are less (more) likely to be associated with bankruptcy. We also find that reorganized firms run by high-ability incumbent CEOs experience improved financial performance after filing for Chapter 11. Firms that hire high-ability CEOs with bankruptcy experience also realize improved financial performance. Our evidence indicates that the likelihood of corporate bankruptcy is unrelated to the presence of high-ability managers and that bankruptcy does not adversely affect the post-bankruptcy careers of high-ability CEOs.
Original Publication Citation
Chowdhury, R., & Doukas, J. A. (2022). Are CEOs to blame for corporate failure? Evidence from Chapter 11 filings. Review of Corporate Finance, 2(1), 1-63. https://doi.org/10.1561/114.00000011
Chowdhury, Rajib and Doukas, John A., "Are CEOs to Blame for Corporate Failure? Evidence from Chapter 11 Filings" (2022). Finance Faculty Publications. 34.