Hiring the Right CEO: How Does the Type of CEO Industry Experience Affect Firm Performance, Firm Risk-Taking Behavior, and CEO Compensation?

  • Candra Chahyadi Eastern Illinois University
  • Trang Doan Eastern Illinois University
  • Junnatun Naym Mississippi State University
Keywords: CEO Industry Experience, Firm Performance, Firm Risk-Taking Behavior, CEO Compensation


This paper examines how the type of CEOs’ industry experience (whether a CEO has cross-industry or specific-industry experience) on firm performance, firm risk-taking behavior, and their own compensation. We find that CEOs with cross-industry experience tend to relatively lower the firm performance as well as invest less on R&D. On the other hand, CEOs with specific-industry experience lead firm to higher performance and invest more on R&D expenditures until it reaches a certain threshold, especially among high-growth firms. Total compensation paid to the CEO does not seem to be affected by the type of CEO industry experience. This paper contributes to the literature that examines the impact of CEO characteristics on firm outcomes and CEO compensation. One important business application of our paper is that to optimize firm performance, firms should hire CEOs with the length of specific-industry experience not beyond the threshold levels.


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How to Cite
Candra Chahyadi, Trang Doan, & Junnatun Naym. (2021). Hiring the Right CEO: How Does the Type of CEO Industry Experience Affect Firm Performance, Firm Risk-Taking Behavior, and CEO Compensation?. International Journal of Business and Society, 22(2), 828-845. https://doi.org/10.33736/ijbs.3762.2021