As part of the Entrepreneurship and Regional Development seminar series, Mr Peter Pardoe (Aston University) will provide a presentation on ‘The Impact of Founder CEOs on Firm Performance’.

Abstract

The research consensus seems to be that Founder CEOs (FCEOs) are, in many instances, poorly equipped to run the business they created beyond the early years and as the firm grows. The perceived wisdom is that unless such FCEOs are replaced by “professional” management then firm performance will decline or, at the very least, stagnate. In such cases FCEOs are forced to accept other roles with less day-to-day control and influence, such as Non-Executive Chairmen, or are exited from the firm completely and their role taken by a Professional CEO (PCEO). Yet studies of FCEOs relative to firm performance that have been carried out previously, including Willard et al. (1992), tended to employ relatively small samples and were focused on a specific area of a single industry, e.g. high-growth manufacturing. In contrast, this research utilises a bespoke secondary data set compiled from first principles. The basis of the data set is firms incorporated in the UK which were listed on the London Stock Exchange on 31 December 2018. Financial information was collected on these 443 unique firms for the period 31 December 1990 to 31 December 2018 together with biographic information on each of the 1,161 CEOs, who were leading these firms during this time. This research is ongoing and the results, findings and conclusions are not yet fully resolved. However, there appears to be some evidence to suggest that the consensus highlighted above might not hold true for this sample.

 

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