An Exploration of the Dynamics Between CEO Status and Firm Status

Abstract

Although research on individual and organizational status has deepened our understanding of each, to date, little attention has been paid to the interlinkages between the two. Drawing from the status literature, we suggest that how organizations value the status of CEOs will differ depending on their organizational context, namely organizational status. To address this, we develop a notion of status disparity, which refers to the relative dominance of CEO status over firm status. Specifically, we explore how the relative standing of the CEO with respect to the firm may affect CEO valuation and examine the impact of such status disparity on CEO-level outcomes: CEO power, compensation, and dismissal likelihood. Empirical results from the panel data set of CEOs in S&P 500 firms supported that the CEOs with greater status disparity are more likely to have higher power and receive greater compensation. The findings indicate that the perceived value of CEO status is linked to organizational status, thus exhibiting how stakeholders perception and attribution can be explained through the idea of status disparity.