Mackey of industry and firm effects. Specifically,

Mackey (2008) was critical of the former empirical
efforts (which applied variance decomposition to analyze the connection between
corporate performance and CEOs), emphasizing methodological problems which
systematically understate the relevant impact of CEOs on firm performance in
comparison to industry and firm effects. By using new methodological tactics
which focus on dissimilar settings of CEO effects, he reanalyzed the percentage
level of variation in firm performance explicated by CEO heterogeneity. The
results revealed that “CEO impact” on corporate profitability is substantially
more significant than that of industry and firm effects. Specifically, Mackey
(2008) discovered that CEO impacts explicated as much as 29.2% of variation in
the performance of a firm.

Few theories have discovered specific managerial
qualities, which explicate corporate performance and governance. Particularly,
Benmelech and Frydman (2013) undertook research into the connection between
military service of CEOs and financial policies, managerial decisions, and
corporate performance. Applying exogenous variation in the tendency to be in
military service, they revealed that military service leads to ethical behavior
and conservative corporate policies. The findings revealed that military CEOs
had a tendency to perform better during industry recessions and lead lower
corporate investment. Similarly, Harvey, Graham, and Puri (2009) state that
CEOs with financial background have a high tendency to follow risky decision-making.
Looking at the issue from a dissimilar viewpoint, Jiang, Hutton, and Kumar
(2010) discover that Republican CEOs follow more conservative corporate
policies compared to Democrat CEOs. Therefore, they deduced that CEO personal
characteristics play an important role in corporate success.

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In comparison to the previous findings, Tate,
Malemendier, and Yan (2010) identified that CEOs had a tendency to follow more
aggressive debt policies, whereas experience CEOs gained during Great
Depression had a tendency to be more conservative in terms of investment
policies. Furthermore, bringing psychology into their study, the authors
investigated that top executives, who persistently overstate their own skills,
are expected to be too optimistic and have a tendency to take on investments
which are risky. The authors explained that those CEOs who possessed
overconfidence characteristic were more expected to be involved in
value-destroying activities.

Perez-Gonzalez (2006), Bennedsen et al (2007), stopped
on the findings that families that are often related to the founder of the
corporation controlled or owned most of the companies around the world. They
provided proof that family successions are usual in Denmark and in the United
States. As a great number of the family CEOs are employed because of family
relations and not competence considerations, the authors identify that family
CEOs considerably damage firm performance.

 Nevertheless,
it is observed that the overwhelming majority of empirical literature
concentrated on US based companies, whereas focusing little attention on
samples from other regions. Following similar regards, this research proposal
contributes to the increasing literature in this area and attempts to estimate
the position of personal qualities of CEOs on predicting the performance of
particular firms in the case of Russian corporations.

 

1.     
 RESEARCH QUESTION AND OBJECTIVES

We seek to make a contribution to the existing gap in
the practical study of significance of CEO effects in explicating certain firm
performance. Specifically, we try to answer the research question below:

“Do personal characteristics of CEO (e.g. military
service, tenure, education background etc.) have an effect on the financial
performance of companies?”

Based on the research question above, we inferred the
following research objectives:

–         
To identify pertinent CEO
characteristics that might affect Russian traded company performance.

–         
To estimate and illustrate the
position of the specific CEO characteristics on finding out the Russian
companies’ operational success.