Joon Mahn Lee

Founder CEOs and Innovation: Evidence from S&P 500 Firms

Using a novel data set on founder CEOs in S&P 500 firms for the period from 1993 to 2003, this paper investigates the relationship between founder CEOs and innovation. While entrepreneurs as individuals have long been considered change agents, it is not clear whether entrepreneurs as managers of large organizations may facilitate organizations’ innovation performance. Our main results show that the existence of a founder CEO is correlated with a 31 percent increase in the citation-weighted patent count before we control for R&D spending and a 23 percent increase in the citation-weighted patent count after we control for R&D spending, suggesting that founder CEOs are more effective and efficient innovators than professional CEOs. As boundary conditions of the relationship, we find that the positive effect of founder CEOs on innovation is stronger in more competitive and innovative industries. Furthermore, our results suggest that founder CEOs are more likely to take their firms in a new technological direction. Finally, we provide evidence that the innovations of founder CEO-managed firms create more financial value than the innovations of professional CEO-managed firms. Our findings are particularly convincing because the results are consistent across various robustness checks that control for potential selection issues and other endogeneity concerns.

CEO Overconfidence and Strategic Flexibility:Evidence from Real Options Investment

While real options theory has been applied with the rationality assumption, the actual real options investments are made by managers, who are often subjective to cognitive biases, especially under ...

Founder CEOs and Acquirer Returns: Evidence from IPO Firms

Drawing from the literature on entrepreneurial overconfidence and M&As, we argue that founder CEO-managed firms perform worse than professional CEO-managed firms when they participate in M&A transactions. We test our predictions using a sample of acquisitions by newly listed US public firms from 2000 to 2012. Consistent with our arguments, we find that acquisitions led by founder CEOs experience lower abnormal returns compared with acquisitions led by professional CEOs. We also find that the negative relationship between founder CEOs and abnormal returns is amplified by CEOs’ M&A experience. We rule out alternative interpretations, including private benefits of control and founder CEOs’ potentially inferior M&A skills. The results are consistent across various robustness checks that control for potential selection issues and other endogeneity concerns.

Multi-Unit Chains, Market Competition, And Product Portfolio Scope: Evidence From Hospitals

We attempt to identify the benefits of multi-unit chain membership and study the boundary conditions of the effects of chain affiliation. We test our arguments in the context of the U.S. hospital i...