The Influence of Top Manager’s Reputation on Stock Mar-ket’s Reactions to Negative Events

Abstract

This study examines the relation between CEO reputation and the abnormal return when a firm facing a negative event We search the Wall Street Journal (WSJ) to collect the research sample We collect 329 samples of negative events of 33 firms out of S&P100 Furthermore we search the ExecuComp database to get the information about CEO’s reputation Finally 157samples are collected after matching with the CRSP and Compustate database We use the CEO’s reputation as the independent variable The proxies follow the study of Milbourn (2003) about the CEO which are CEO’s tenure CEO is appointed from outside of the firm and firm performance during the CEO’s tenure We analyze whether CEO’s reputation can decrease the information asymmetry then when a firm face a negative event a firm will have less harm because investors will use the CEO’s reputation as an indicator to do reaction According to the result of our analysis CEO’s reputation does influence the abnormal returns when a firm under the situation of negative event However among three proxies only the CEO’s performance is positively related to the abnormal returns no matter tested by the original or adjusted performance

Date of Award	2015 Feb 10
Original language	English
Supervisor	Shao-Chi Chang (Supervisor)