Article

CEOs’ Characteristics Indian Journal of Corporate Governance

11(2) 1–16
and Firm Performance: © 2018 Institute of
Public Enterprise
A Study of Indian Firms SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/0974686218806714
http://journals.sagepub.com/home/ijc

Rupinder Kaur1
Balwinder Singh2

Abstract
The centre of interest of this research article is the association between chief
executive officer (CEO) characteristics and firm performance. Employing a sam-
ple of Nifty 500 firms, the support found recommends that demographic and
job-related characteristics may be related with the firm’s financial performance.
We consider CEO gender, duality, nationality, remuneration and education level
as CEO characteristics and we employ return on assets (ROA) as a representa-
tive for firm performance. This study widens the understanding of the important
function played by the CEO and provides better insight into CEO-specific vari-
ables. Specifically, the reported findings specify a positive relationship between
CEO remuneration and firm performance, thus indicating that compensation acts
as a good inducement for executives to yield finer firm performance while CEO
nationality appears to inhibit it, steering foreign directors to a minority spot.
This implies that remuneration should be more thoughtfully attached to perfor-
mance, so that proficient CEOs are not lured by more tempted compensation
elsewhere and the decision to engage foreign nationals to company boards must
be based on norms other than the firm’s future financial performance.

Keywords
CEO characteristics, corporate governance, firm performance, upper echelons
theory, India

1
Research Scholar, University School of Financial Studies, Guru Nanak Dev University, Amritsar,
Punjab, India.
2
Professor, University School of Financial Studies, Guru Nanak Dev University, Amritsar, Punjab,
India.
Corresponding author:
Rupinder Kaur, Research Scholar, University School of Financial Studies, Guru Nanak Dev University,
Amritsar 143005, Punjab, India.
E-mail: rupindergndu17@gmail.com
2 Indian Journal of Corporate Governance 11(2)

Introduction
‘Don’t lead sheep, herd cats’ aptly stated by Richard Branson, the chief executive
officer (CEO) of the Virgin Group, who controls more than 400 companies.
This interesting take on leadership by Branson forms a secret to his success and
shifts our attention to strategic management theory which is growingly con-
cerned with top managers and their impact on strategy formulation and firm per-
formance. But is it really possible for these managers to have an essential impact
on the overall performance of the firms they lead? Leadership carried out by
CEOs is seen as a vital constituent for the rebirth of organisations (Tichy &
Devanna, 1986) and as very essential to the top management of large firms (Katz
& Kahn, 1978) and countries (Burns, 1978; House, Spangler, & Woycke, 1991).
Both the academic and popular literature give an account of the commonly
shared belief that the CEO is the most influential organisational member in a
progressive organisation (Hambrick, 1991; Hosmer, 1982; Pearce, 1981). CEOs’
power is commonly associated with their legal authority, as well as the wide
knowledge of the organisations they serve and their strong effect on firm’s stra-
tegic direction and internal processes (Beatty & Zajac, 1987; Mizruchi, 1983;
Roth, 1995). It has also been put forward that CEOs set the mood for the entire
organisation (Wheelen & Hunger, 1990) and that the CEO is ‘the corporate head’
(Norburn, 1989). Besides, CEOs are obvious research targets, for the reason that
they are in many facets the most visible and influential executives of a firm.
The upper echelons theory (UET) explains an important phenomenon in the
field of behavioural finance. The theory states that the executive background
attributes or traits determine organisational results, possible courses of action and
the levels of performance (Hambrick & Mason, 1984). It suggests that the more
difficult a decision, for example, strategic actions, the more essential the individual
characteristics of the top managers, such as, gender, age and education level.
The proposition of the theory recognises that executives’ different traits have an
impact on structure and strategy and therefore it will directly have an impact on
firm’s strategic courses of action and organisational performance (Nielsen, 2010).
Moreover, the theory stresses that leaders who are rational in nature will make a
decision on the basis of their reasoning capabilities or physiological and social
characteristics. However, other researchers have argued the opposite view that
organisational results are not determined by leadership (Hall, 1977), suggesting
that industry and company like determinants have a more vital effect on corporate
performance (Kimberly & Evanisko, 1981; Lieberson & O’Connor, 1972), that
CEO efforts are subject to environmental limitations (Aldrich, 1979) and that firm
performance owes very small to CEO contributions (Galbraith, 1984). Nevertheless,
the current article embraces the view that CEO characteristics do matter.
Not only this but other theories of strategic management have also focussed on
the effect of top-level executives such as CEOs and top management teams
(TMTs) on the firm’s strategic direction and overall performance. The agency
theory asserts that managerial efforts deviate from those required to discharge the
best interest of the shareholders, especially when ownership is widely spread
(Donaldson & Davis, 1991). This theory is essential to be considered in this study
Kaur and Singh 3

as it gives an idea of what may control the actions and motives of the CEO. These
crucial actions by the CEO may have an impact on the firm performance in a
direct or indirect way. The stewardship theory assumes that there are some execu-
tives who make an effort to do a good job and be a constructive agent to their
owners. This theory declares that differences in firm performance can be allocated
to productive actions and reactions of the CEO. This theory assumes that success-
ful actions could be quickly taken in systemic situations where the CEO has the
authority to take concrete actions for achieving better firm performance
(Donaldson & Davis, 1991; Miller & Sardais, 2011). On the other side, the
resource-based theory shoots from the proposition that the source of firm’s com-
petitive advantage rests in their internal resources, which means rather than sim-
ply assessing environmental opportunities and threats in managing business,
competitive advantage depends on the distinctive resources and potential that a
firm owns (Barney, 1995).
The article has some additional contributions: first, a considerable majority of
studies investigating the relationship between senior executives and firm perfor-
mance focus on only one attribute of the managerial persons, say, for example,
gender. However, in addition to gender, this article examines the wider concept of
diversity including nationality, remuneration, duality and education level. Second,
the article has attempted to add to the fundamental age-old discussion about
whether top executives have an impact on essential firm outcomes especially in
the context of India where a very few studies have investigated the same to the
best of our knowledge. There are a number of compelling reasons to examine
India as an acceptable case for this study. There is an emerging consensus among
analysts that India is one of the speediest emerging countries in the world with a
vibrant, developed and dynamic capital market, steady political environment and
high integration of financial markets. The difference in the market structure, pol-
icy scenario and the unique culture makes it indispensable to study the Indian
market (Gupta, Mahakud, & Debata, 2018).

Related Literature

CEO Gender
One of the most scrutinised managerial attributes is gender. Generally, the previ-
ous corporate finance literature points out that the differences based on the gender
may have an impact on an individual’s success at job. For example, Peni (2014)
demonstrated that female CEO dummies appeared statistically significantly posi-
tive indicating that organisations with female CEOs tend to surpass organisations
with male CEOs. In addition to the positive impact between female CEOs and
firm performance, Khan and Vieito (2013) also suggested that the firm risk level
is little when the CEO is female as compared to male CEOs. However, Singhathep
and Pholphirul (2015) were of the view that even though the number of females
in the manufacturing sector was small, female CEOs of Thai manufacturing firms
were found to have a negative impact on both short-lived financial performance
4 Indian Journal of Corporate Governance 11(2)

measures, containing profits and the annual sales, and long-term firm develop-
ment indicators including process innovation, product innovation and provision
of employee training. Similar finding has been reported by Amran (2011) who
showed that male CEOs are found to intensify the firm value than female CEOs,
when market value was kept as the base. On the other hand, there are studies
which support that existence of a female CEO is not associated with firm value
(Amran, Yusof, Ishak, & Aripin, 2014; Vintilă, Onofrei, & Gherghina, 2015).

CEO Duality
CEO duality refers to the simultaneously holding of both the CEO and chairperson
positions. The simultaneously holding of these positions strengthens the authority
or control of the two positions in a single individual. Finkelstein and D’Aveni
(1994) asserted that CEO duality is a two-edged sword. It is conceptualised
because it compels boards to pick between the conflicting objectives of unity of
command and avoidance of entrenchment. Talking about the literature, the
estimated coefficients had shown the absence of any statistically significant
relationship between the binary variable regarding CEO duality and firm value,
thus validating the study of Vintilă et al. (2015), Daily and Johnson (1997) and
Elsayed (2007). However, Peni (2014) suggested that dedication within the firm
may enhance firm performance because holding both the positions of CEO and
chairperson gives the officer huge opportunities to influence the firm’s growth
and development. Moreover, she or he may consider fine firm performance as a
personal achievement and challenge, and may hence be ready to devote more into
the roles. Much the same results on the influence of CEO duality on the firm have
also been outlined by Pham, Oh, and Pech (2015) by providing proof in support
of stewardship theory that CEO duality has a positive impact on mergers and
acquisitions in Vietnam. Notably, dual firms have significantly higher growth
performance and higher announcement abnormal returns as compared to non-dual
firms. However, Ujunwa (2012) suggested that CEO duality was negatively
linked with firm performance. This result is in agreement with the agency theory
which postulates that board duality encourages CEO entrenchment by diminishing
board monitoring effectiveness and hindering firm performance. Likewise, Chen,
Cheung, Stouraitis, and Wong (2005) established a negative relationship between
CEO duality and firm performance where CEO duality was much more prevalent
in family-controlled organisations.

CEO Nationality
Global enterprises often face with the dilemma of who should be the CEO: a
representative of the host country or a representative of the home country.
Therefore, it becomes essential to study the limitations of CEO nationality in terms
of its effect on firm performance. Badru and Raji (2016) confirmed a positive
relationship between the CEO’s nationality and company performance indicating
Kaur and Singh 5

that CEO’s nationality provides a better placement of interests of executives and

shareholders, which enhances a firm’s competitive edge. Similarly, Ujunwa (2012)
advocated that board nationality was positively linked with firm performance
showing sound support for the resource dependency theory which points that
foreign board members provide great economic flexibility. On the other side,
Elsharkawy, Paterson, and Sherif (2018) have declared that foreign directors have
a negative impact on the performance of banks in the UK which is consistent with
the previous literature (García-Meca, García-Sánchez, & Martínez-Ferrero, 2015).
Likewise, Masulis, Wang, and Xie (2012) emphasise that foreign directors are not
well known with the national rules and regulations, and normal indigenous methods
of management, suggesting that foreigners have significant poor performance.
However, CEO nationality does not seem to be linked with CSR performance
(Huang, 2013) as well as participation in voluntary environmental programmes
and environmental performance (Rivera & De Leon, 2005).

CEO Remuneration
Currently, there is a widely held view that top managers are overpaid or over-
priced (Gomez-Mejia, 1994) and CEO remuneration has captivated a widespread
attention and has become one of the central issue in corporate governance (Felton,
2004). An investigation of the compensation received by the three highest paid
senior managers of a sample of 49 big firms indicated that corporations that
reward better function better. That model was evident despite of whether perfor-
mance was evaluated in terms of internal operating profitability or stock market
returns (Lewellen, Loderer, Martin, & Blum, 1992). A positive and significant
link between the CEOs’ pay and the performance of corresponding firm was
found, and it came into sight that CEO pay is used to place the shareholder’s inter-
ests with company CEOs, bringing down the agency costs within the firm (Sigler
& Haley, 1995). However, Core, Holthausen, and Larcker (1999) announced that
surplus CEO compensation had a negative relation with subsequent stock returns
and operating performance. Much the same result was found by Brick, Palmon,
and Wald (2006) who showed that too much compensation (both CEO and direc-
tor) was related with firm underperformance. The proof was in harmony with
surplus compensation due to cronyism. Interestingly, Tosi, Misangyi, Fanelli,
Waldman, and Yammarino (2004) established a relationship between CEO cha-
risma and higher payment but were unsuccessful to prove any link between CEO
compensation and firm performance. Also, Ozkan (2011) established a non-sig-
nificant association between total CEO compensation and firm performance of
UK non-financial firms.

CEO Education Level

There are no rules demanding that CEOs must have a postgraduate degree or that
they should have attended college. Nevertheless, not many people these days
6 Indian Journal of Corporate Governance 11(2)

make it to the peak of the corporate ladder in the absence of formal education
(Zandi, Lok, Aslam, & Singh, 2015). Barker and Mueller (2002) confirmed that
there was a significant enhancement in R&D spending linked with a CEO
possessing an undergraduate degree, but no significant impact was noticed for
advanced levels of educational achievement. Likewise, CEO’s competence
indicated that in firms where the CEO possesses better educational qualifications,
there is no enhancement in performance (Serra, Três, & Ferreira, 2016). However,
Farag and Mallin (2018) displayed that there is a very significant and positive
association between CEO higher education estimated by CEOs who have degrees
like MBA, MSc and PhD, and corporate risk taking. It was asserted that better
educated CEOs are less opposed to risk and are probably to be more available to
creative business ideas and, therefore, they are well informed regarding their
external environment. Similarly, CEO formal education was positively associated
with both firm strategic actions and future firm performance (Wang, Holmes, Oh,
& Zhu, 2016). It might be that better educated CEOs have finer training, substantial
cognitive growth and a wealthy knowledge base, possibly intensifying future firm
performance by developing their decision-making and encouraging more relevant
strategic actions (Dragoni, Oh, Vankatwyk, & Tesluk, 2011).
Hypothesis
The previous literature implies that CEO characteristics may have essential effects
in many fields of business. In this research article, it is supposed that CEO char-
acteristics may have an impact on firm performance. Since the findings reported
by previous studies on CEO characteristics and firm performance are to some
degree mixed, the hypothesis of this article is presented in a non-directional way:
Null hypothesis: There exists no relationship between CEO characteristics
and firm performance.

Data
The sample employed in the empirical analysis is composed of Nifty top
500 firms. Following previous studies, the financial institutions are excluded from
the analysis due to their unique features. Additionally, observations with inade-
quate data are also excluded from the sample. The sample period stretches from
2012 to 2016. The final sample is composed of 329 firms and 1645 firm-year
observations. The data on CEO characteristics were manually collected from the
annual reports and websites of the respective companies. Where data availability
was a problem, the executive data were finished off by accessing Bloomberg,
Wikipedia and LinkedIn accounts of the respective CEOs. Data related to the
financial variables were gathered from the ACE Equity database. In case of the
absence of CEO of a company, the person holding the post equivalent to that of a
CEO has been studied by taking into consideration that person’s signatures
marked on CEO/CFO certification or on the declaration with regard to the code of
Kaur and Singh 7

conduct for board and senior management as per Regulation (17)5 (a) of SEBI
(Listing Obligations & Disclosure Requirements) Regulation, 2015.
The descriptive tabulation of the sample is delineated in Table 1. As can be
observed from Table 1, only 3 per cent of the investigated CEOs are female.
The CEO duality is not so common within the sample, as the variable’s mean
value is as low as 0.298. Table 1 also displays that only 1.9 per cent of the CEOs
are foreigners. Besides this, the maximum amount of the CEO remuneration is
`661.4 million while the minimum amount is `0. The average return on assets
(ROA) is 8.19 per cent, whereas the average firm size, represented by natural
logarithm of total assets, is 7.73. Table 2 displays pairwise correlations for the
variables utilised in the evaluation. It is evident from Table 2 that there is no proof
of a problem of multicollinearity because none of the correlations connecting two
independent variables is above 0.50 significantly. Firm age is the single control
variable that is not correlated with ROA. Among the independent variables, CEO
nationality, education level and remuneration are correlated with ROA while CEO
duality and gender are not correlated at any level of significance.

Table 1. Descriptive Statistics

Variable Mean Median SD Max Min

ROA 8.193 6.823 9.126 116.727 −55.767
GEN 0.030 0.000 0.170 1.000 0.000
DUAL 0.298 0.000 0.457 1.000 0.000
NAT 0.019 0.000 0.136 1.000 0.000
REM 40751795 23869268 58499763 661400000 0.000
EDU 0.577 1.000 0.494 1.000 0.000
SIZE 7.725 7.609 1.457 12.716 3.579
FAGE 38.942 30.000 23.885 153.000 3.000
LEV 0.236 0.185 0.236 2.442 0.000
SALES 14.325 10.595 47.602 1115.546 −91.260
Source: Based on researcher’s analysis.
Note: Descriptive statistics for all firms (n = 1,645 observations).

Methodology
The relationship between CEO characteristics and firm performance is investi-
gated through panel regression and the following model has been framed:
Yj,t = α0 + β(Characteristics) + y(Controls) + Ɛj,t
where Yj,t is ROA for firm j in year t. The ROA is introduced as profit after tax as
a percentage of total assets excluding revaluation. The characteristics used in the
model are defined as follows: GEN is a dummy variable which is assigned as one
Table 2. Correlation Analysis

Variables ROA DUAL GEN NAT EDU REM FAGE SIZE LEV SALES
ROA 1.00
DUAL 0.03 1.00
GEN 0.02 −0.07*** 1.00
NAT −0.06*** −0.09*** −0.02 1.00
EDU 0.04* −0.10*** 0.06*** −0.02 1.00
REM 0.18*** 0.12*** −0.01 0.01 −0.01 1.00
FAGE −0.01 0.01 0.09*** 0.05** 0.10*** 0.09*** 1.00
SIZE −0.18*** 0.11*** −0.05* 0.08*** 0.11*** 0.23*** 0.12*** 1.00
LEV −0.46*** 0.02 −0.01 0.01 0.01 −0.07*** 0.02 0.29*** 1.00
SALES 0.09*** −0.01 −0.01 −0.03 −0.02 −0.01 −0.05** −0.05** −0.02 1.00
Source: Based on researcher’s analysis.
Notes: Pairwise correlations have been reported in Table 2. ***, ** and * indicate significance at the 0.01, 0.05 and 0.10 levels, respectively.
Kaur and Singh 9

if the examined CEO is female; NAT is a binary variable, which is assigned as one
if the CEO is from foreign nations and zero if otherwise; DUAL is recorded as a
dummy variable and has been assigned as one if the examined individual is both
the CEO and chairman of the board; REM is the total annual compensation
received by the CEO and to quantify CEO education level (EDU), we again devel-
oped a dummy variable that captures the value of 1 if a CEO carries a postgradu-
ate degree, for instance, masters and/or PhD and zero otherwise. The control
variables used in the analysis are defined as follows: LEV is the firm’s financial
leverage calculated as total debt divided by total assets, SALES is the sales growth
rate calculated as the relative increase in sales over the last year, SIZE is the natu-
ral logarithm of total assets and FAGE is calculated in years since the year the
firm was incorporated.
The selected attribute variables present demographics (gender, education level
and nationality) and job-related factors (duality and remuneration). The control
variables included are chosen based on the previous literature. Leverage is a
representative of the financial status of the firm and, thus, essential when firm
performance is evaluated (Bhagat & Bolton, 2008). The net sales growth is often
positively associated with firm performance (Rose, 2007). Firm size is proclaimed
to have a significant effect on company performance (Adams & Santos, 2006).
In addition to this, Becker, Defond, Jiambalvo, and Subramanyam (1998)
proposed that firm size may also serve as a substitute for various missed out
variables. Firm age is an important dimension as it can have an effect on managerial
decision-making, for instance, through the threat-rigidity effect (Staw, Sandelands,
& Dutton, 1981).
In this particular regression specification, fixed effects model was adopted.
This model specifies that there are distinctive effects of individual companies,
which are not produced by random variation and are time invariant (Hsiao, Lahiri,
Lee, & Pesaran, 1999; Madalla, 2001) and, hence, it is a suitable method in this
research frame.

Results
The estimated results of the panel regressions are outlined in Table 3. A test of
multicollinearity was performed to scrutinise for correlation among the independent
variables. Keeping the cut-off rate for VIF at 10, we detect no multicollinearity.
Second, we enquired into heteroskedasticity of residuals and accordingly the
results have been reported with robust standard errors after checking for the same.
The statistics of Hausman test recommends the use of fixed effects model. Table 3
demonstrates that the control variables, that is, leverage and net sales growth rate,
are statistically significant and possess the signs that can be anticipated based on
the prior literature. SALES is positively related to firm performance (Rose, 2007),
whereas leverage is negatively associated with ROA, which is consistent with
previous literature (Cui & Mak, 2002).
10 Indian Journal of Corporate Governance 11(2)

Table 3. Fixed Effects Model for CEO Characteristics and Firm Performance

Coefficient Standard Error t p>t

DUAL 0.5636492 0.5541261 1.02 0.310
REM 1.52e-08 5.99e-09 2.54 0.012*
EDU −0.87428 0.9447618 −0.93 0.355
GEN 1.070896 2.841245 0.38 0.706
NAT −3.280445 1.371555 −2.39 0.017*
SIZE 0.6813746 0.9673885 0.70 0.482
LEV −8.87712 2.852652 −3.11 0.002*
SALES 0.0105659 0.0050581 2.09 0.037*
FAGE −0.127694 0.1592564 −0.80 0.423
Constants 9.593376 5.394307 1.78 0.076
Prob. > F 0.0002
R-squared 0.7222
Adj. R 2
0.6505
Source: Based on researcher’s analysis.
Note: * Report the level of significance at 5%.

As can be observed from Table 3, the p-value of F-statistic is significant at

1 per cent level and hence, the model is fit. Moreover, the adjusted R2 accounts for
65.05 per cent providing the percentage of variation described by only those
explanatory variables that actually have an impact on the dependent variable.
Altogether, the results furnished in this panel regression demonstrate that the
CEO characteristics may explain for variability in firm performance.
As depicted from Table 3, CEO remuneration emerges statistically significantly
positive in the model at par with the studies conducted by Lewellen et al. (1992) and
Sigler and Haley (1995). Lewellen et al. (1992) suggested that there should be an
inducement for executives to yield finer market performances for their companies,
so that they are rewarded subsequently with higher pay scale as the relationship was
most marked as a lagged one. In this way, CEO compensation programmes would
function to lessen agency costs. Based on a similar finding, Lewellen and Huntsman
(1970) made a clear conclusion that there is a greater inducement for management
to design its decision rules in agreement with interests of shareholders than to strive
for alternative objective of maximisation of revenue.
Table 3 also puts forward that CEO nationality has a significantly negative
impact on ROA. García-Meca et al. (2015) were of the view that demographic dis-
similarities reduce social togetherness between classes and groups, and these social
obstacles lower the chances of minority perspectives to have an impact on group
decisions. This steers foreign directors to a minority spot that slows down the deci-
sion procedure and makes it more clashing, eventually reducing the performance.
Likewise, Masulis et al. (2012) emphasise that foreign directors are not well known
with the national rules and regulations, and normal indigenous methods of man-
agement, suggesting that foreigners have significant poor performance.
Kaur and Singh 11

However, CEO gender, education level and duality appear to have no significant
effect on ROA. The effect of female CEOs turns insignificant which shows that
very few Indian firms have had females at the CEO level, and hence panel
evaluations of this relationship are determined with a vast statistical uncertainty.
Another reason may be that the few firms who employ females at the top position
of their institution are organisations which are also performing well on various
other unmeasured attributes, for example, sound working conditions and good
work environment, a relatively better recruitment policy and so on (Smith, Smith,
& Verner, 2006). Confirming the results of this study, Gottesman and Morey
(2010) and Bhagat, Bolton, and Subramanian (2010) argue that the advantages
that flow to a CEO or firm from gaining from the level or domain of his/her
educational background depreciates by the long time between the point the CEO
finished the education and the point the individual attains the position of CEO.
This shows that as time proceeds, the distinct skills of educational background of
CEOs may slowly disappear away. Therefore, this means that when firms are
taking into account the candidates to occupy the position of a CEO, business and
environmental factors play an important role. On the other side, the insignificant
effect of CEO duality suggests that neither stewardship nor agency models can
fairly predict the impact of CEO duality.

Limitations
Several shortcomings need to be carefully reflected in understanding the results
furnished in this article. First, the sample is composed of Nifty 500 firms, and
hence, the results may not be relevant for small-scale enterprises or to firms func-
tioning outside India. Future research could also try to investigate the nature of
these associations in unlisted and financial companies. Second, since the data on
characteristics were manually collected, the sample period is restricted to five
financial years, and hence, longer-term impact of CEO characteristics on firm
performance cannot be scrutinised based on these statistics. Third, in addition to
the investigated features, other CEO-particular attributes may have implications
on firm performance. Due to unavailability of data, additional examination with
other trait variables could not be conducted here, but studies in future could
inspect, for instance, the impact of CEO ownership, age, tenure, career paths,
experience, marital status, number of children, founder status and wealth on firm
performance. Fourth, the CEO characteristics could create a problem of endoge-
neity. In spite of controlling for certain effects, some correlated variables may
have been left out, or there may be certain firm-specific factors which might con-
currently influence the firm performance and the choice of the executive.
Unluckily, finding tools for these types of experiments is very hard, specifically
in this case in which many CEO variables are covered in the research. Previous
literature indicates many analytical problems and extremely misleading parame-
ter estimates related to weak instruments (Hahn & Hausman, 2003; Larcker &
Rusticus, 2010) and so, using perhaps weak tools to control for endogeneity may
actually do more wrong than good. Hence, endogeneity tests were not carried out
12 Indian Journal of Corporate Governance 11(2)

in this article, and as a result, the results reported should be contemplated rather
exploratory. Fifth, the article has not incorporated the marketing measures of firm
performance like Tobin’s q which is a long-term dimension and stipulates the
firm’s capability to improve performance over time (Caton, Goh, & Donaldson,
2001). Additionally, this measure also takes into account the risk–return associa-
tion (Jose, Lancaster, Stevens, & Jennings, 1996).

Conclusion
The article explores the relationship between CEOs’ characteristics and firm per-
formance. The study is inspired by previous literature detailing that CEOs’ demo-
graphic and job-related characteristics may be associated with firm performance.
For example, gender-based dissimilarities may have vital ramifications for the
working operations of an executive. Not only gender, but the prevailing literature
proposes that other characteristics, such as, duality, education level, nationality and
remuneration, may have an influence on CEOs’ capability to manage their job.
Build on a sample of 5 years of Nifty 500 firms, the results reported in this
research article were mainly consistent with the prior literature and revealed that
foreign CEOs are negatively related to ROA while CEO remuneration has a
positive relationship with the firm performance. However, CEO duality, education
level and gender did not have a significant impact on the dependent variable.
This research article has certain policy repercussions; we postulate that enquir-
ing into the demographic and job-related characteristics of the Indian CEOs may
serve beneficial insights to shareholders and policymakers. The shareholders and
policymakers usually seek to employ the most skilled and accomplished CEOs
with the relevant set of talent to attain shareholders’ goals and enhance the Indian
competitiveness in the global market. The findings are pertinent for investors and
corporate managers of the company for whom the characteristics of CEO may be
regarded as an essential source of knowledge for formulating and implementing
investment policy. Moreover, to turn down the turnover that arises when CEOs
switch jobs for finer financial rewards, CEO remuneration should be more closely
attached to performance so that capable CEOs are not lured by more enticed com-
pensation elsewhere. Also, the choice to involve foreign nationals to company
boards must be built on models other than the future financial performance of the
firm. The goal should be to make certain that the firm and the CEO share a joint
fate for common gain. The present scenario also calls for wider board diversity and
to keep board diversity as a permanent feature of good corporate governance.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research,
authorship and/or publication of this article.

Funding
The authors received no financial support for the research, authorship and/or publication
of this article.
Kaur and Singh 13

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