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Effect of CEO human capital on managerial decision making and firm growth
Dissertation   Open access

Effect of CEO human capital on managerial decision making and firm growth

KwangJoo Koo
Doctor of Philosophy (Ph.D.), Drexel University
Sep 2012
DOI:
https://doi.org/10.17918/etd-7601
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Abstract

Human capital Chief executive officers Accounting
This dissertation examines how CEO human capital, one of the most critical issues in recent firm research, affects crucial managerial decisions and firm growth. Academics and practitioners have increasingly focused on human capital given the value that it provides to firms. Scholars have recently begun exploring the role of human capital in CEO selection and compensation schemes. For example, Kaplan, Mark, and Morton (2011) document the important characteristics and abilities of candidate CEOs. Building on upper echelon theory and human capital theory, the present study hypothesizes that managerial decisions and firm performance depend on CEO human capital. It also documents two types of human capital that play mutually exclusive roles in determining fixed and contingent components of compensation: general human capital and firm-specific human capital. My findings suggest that CEO human capital is essential to understanding firm operations, and that general human capital is the most important driver of firms' value-enhancing investment activities over a nine-year period, consistent with human capital theory. Finally, the study outlines possible avenues that scholars can pursue to further examine the role of human capital in managerial decision making and firm growth.

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