Faculty in the news - Powerful CEOs and Dividend Policy

Professor Shahbaz Sheikh was interviewed regarding his latest article "CEO power and the likelihood of paying dividends: Effect of profitability and cash flow volatility" published in the Journal of Corporate Finance. 

Excerpt from the Social Science News: 

"The research was particularly focused on CEOs who were determined to have high levels of power emanating from structural, ownership and expert dimensions.

Structural power can be measured through CEO pay relative to the management team, , the ratio of independent directors on the board, and whether the CEO is also president and/or chair of the board.

“CEO power indicates poor governance” said Sheikh, professor in the DAN Department of Management & Organizational Studies. “If the board elects you, the board should not be influenced by you.”

If a CEO owns a large portion of the company, particularly if they are the original founder of the company, they often have high levels of power.

If a CEO has been in the position for a long time, and has been successful, they will be powerful. “If a CEO has been able to maintain a profitable company, their team won’t challenge the decisions they make,” said Sheikh."

Read the full article here.