High-profile leadership: celebrity CEOs and corporate cash reserves
Aug 01, 2025
DOI: https://doi.org/10.1108/JAL-09-2024-0238
Published in: Journal of Accounting Literature
Purpose Using a hand-collected dataset, this research contributes to the literature on how CEO personal qualities influence company choices and decision-making. To accomplish this, it investigates the relationship between the CEO’s personal celebrity and cash reserves. Design/methodology/approach Our sample includes all non-financial businesses that were listed on the S&P 500 between 2005 and 2020. Employing principal component analysis, we create the CEO celebrity index as a multidimensional index that includes CEO media presence, CEO tenure, internal/external CEO appointments and industry-adjusted performance. We also use a high-dimensional fixed effects model with fixed effects for industry and year to analyze the data. Findings Our findings indicate a positive and significant relationship between the CEO’s personal celebrity and financial reserves. Our findings are consistent with different cash reserve metrics and estimators. Extended investigations show that CEO gender (male), macroeconomic conditions (GDP growth) and corporate diversity all have a negative influence on the association between CEO celebrity and cash reserves, although technology dynamism has a positive impact. Consistent with predictions of upper echelons, agency theory, resource-based theory, and stakeholder theory, this implies that celebrated CEOs tend to reserve more cash than non-celebrated CEOs because celebrated CEOs have more to lose in terms of career prospects and benefits. Originality/value (1) This paper is the first, to our knowledge, to establish empirical and theoretical linkages between CEO celebrity and cash reserve policy. (2) It presents a new explanation for why managers, particularly celebrities, want to keep excessive cash reserves. (3) It combines two independent fields of research on CEO personal celebrity and cash reserves policy.
Other Researches
Right-to-Work Laws and Firm Productivity in U.S. Firms
We investigate the impact of Right-to-Work (RTW) laws on firm-level total factor productivity (TFP) in U.S. firms. We find that RTW laws, which reduce union bargaining power, are associated with a decrease in firm-level TFP, particularly for firms a...
The dark side of intangibles? Organizational capital and corporate investment efficiency
Purpose Organizational capital (OK) represents an important intangible productive firm asset, yet one subject to agency problems. This paper provides a first examination of how OK impacts corporate investment inefficiency using an unbalanced panel ...
Being famous matters: Evidence from cash flow volatility
Corporate reputation is a paramount driver of value creation and competitive advantage in the 21st century. Motivated by the importance of cash flows and the under-researched nature of their volatility in the corporate finance literature, we investi...
Are MBA CEOs really more risk-averse?
This paper extends the literature on upper echelons theory that emphasizes the impact of top executives' personal characteristics on their choices by examining the relationship between CEOs holding MBAs and the riskiness of corporate policies, inclu...
Cryptocurrency volatility: A review, synthesis, and research agenda
This paper takes part in the ongoing debate on the newly emerging field of financial technology by systematically reviewing 164 articles on cryptocurrency volatility during the period from 2016 to December 2022. This paper also aims to enlighten aca...
CEO media coverage and cash holdings
Utilising a unique hand-collected dataset, this paper examines the relationship between media coverage of chief executive officers (CEOs) and cash holding. Using a sample of all stocks listed on the S&P 500 over the period 2005–2020, we find a posit...