How has turning over executive control to a professional CEO, helped the firms?
Our earlier study on executive compensation showed that as the firms became larger, they tended to have a professional as a CEO. For example, only 47% of the firms in the Rs 1,000 – 2,500 Cr size range are managed by Professional CEOs while 75% of the firms in the Rs 25,000 – 50,000 Cr size range are managed by Professional CEOs. As the economy grows and matures, firms will become larger and more promoters will be looking to turn over management to professionals.
How have the firms that went from Promoter-CEO managed to Professional-CEO managed, performed? And hence, what does this hold for a promoter? That is what we explore in this article.
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