To What Extent Do CEOs Matter for Firm Abnormal Profits Sustainability?

This study examines the role of CEO in abnormal profits sustainability using a modified profit partitioning and first-order auto-regression model. By testing the data from 2001 to 2016 on a large sample of CEOs in Chinese publicly listed firms, the results show that the incremental component of CEO effect is estimated to persist at an average rate of 0.206 and 0.179 contributed to firm abnormal profits, respectively according to IO view and RBV. Further, the longitudinal analysis suggests that the CEOs’ effect on firm abnormal profits sustainability has been increased over the study period, indicating CEOs play a more and more important role for firm abnormal profits sustainability in China.