Firms led by award-winning CEOs tend to do worse afterwards
A 2009 study by Ulrike Malmendier and Geoffrey Tate found that companies whose chief executives win prestigious awards go on to underperform, both in share price and operations. It fits a wider critique: that the celebrity CEO is partly a media creation, and that fame can breed overconfidence at the top.
The phrase chief executive officer is older than the modern corporation. A 1782 ordinance of the American Congress of the Confederation used it for the governors and executive leaders of each former colony. The abbreviation CEO, according to the Oxford English Dictionary, first appeared in Australia in 1914, with the earliest American example not until 1972.
In practice the CEO sits at the top of management, answers to a board of directors, and is ultimately accountable for decisions across operations, marketing, finance and staffing. Some countries separate power more formally with two boards: an executive board run by the CEO and a supervisory board chaired by someone else, so no single person holds too much control. In the United States, charities usually call the equivalent role executive director, while British councils describe their chief executive in law as the head of paid service.
The cult of the boss has deep roots. Publicists such as Edward Bernays, working for John D. Rockefeller, and later the image-makers around Henry Ford promoted the idea of the heroic leader. Researchers argue this glosses over the organisation that actually does the work and encourages hubris once executives start believing their own press.
Pay has become a flashpoint. In the United States the ratio of chief executive pay to that of the average worker was 20 to 1 in 1965 and had reached 376 to 1 by 2000, though some smaller countries remain near the old level. Diversity is another criticism: women led 5 percent of Fortune 500 companies in 2018 and 10.4 percent in 2023. Beyond the Sarbanes-Oxley rules on financial reporting, there is no standard framework for judging how well a CEO performs.
Source: Chief executive officer
