Do CEOs Matter?

Writing in Fortune, Justin Fox examines the impact of corporate CEOs. An excerpt:

Do CEOs really matter? Back in 1972, an article by Stanley Lieberson and James O'Connor in the American Sociological Review contended that the identity of the chief executive mattered far less to corporate performance than which company he ran and which industry it happened to be in.

Ever since then, management scholars have been arguing about whether Lieberson and O'Connor were right. I think it's fair to say that the consensus now is that they weren't--CEOs do matter. Two interesting recent papers on the topic available online, for those of you who like footnotes and advanced statistics, are "The Good, The Bad, and the Lucky: CEO Pay and Skill," by Robert Daines, Vinay B. Nair, and Lewis Kornhauser, and "How Much Do CEOs Influence Firm Performance--Really?" by Alison Mackey.

But it's also fair to say that academic research does not reveal CEOs to be the corporate superheroes we often portray them as in the business media. Consider the recent study of "superstar CEOs" by Ulrike Malmendier of the University of California at Berkeley and Geoffrey Tate of the University of Pennsylvania's Wharton School, who found that companies run by top executives who won awards handed out by the business press between 1975 and 2002 consistently underperformed the market after being honored. Malmendier and Tate argue, in part, that CEOs who are anointed as superstars neglect their jobs.