Insight

Do award-winning managers under-perform?

Ulrike Malmendier and Geoffrey Tate compare the performances of CEOs with award-winning CEOs

AP

That business awards are highly coveted in any sector and create a pecking order of managers is well known. But that these award-winning CEOs subsequently under-perform on the job is what a study by Ulrike Malmendier and Geoffrey Tate has revealed. According to the duo, when compared with a sample of CEOs who hadn't received any awards, the performance of these ‘superstar’ CEOs was actually below par. Worse, it didn’t even match their performance before winning the award. Despite this, ‘superstar’ CEOs draw much higher salaries than their peers, just on the strength of the awards and subsequent media adulation. They were also found to spend a lot of time on activities outside of their firm’s workings, such as accepting board seats or writing books, all of which doesn’t bode well for shareholders. 

 

Title: Superstar CEOs.

Source: The National Bureau of Economic Research

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