Authors: Professor David F. Larcker, Stanford Graduate School of Business, and Brian Tayan, Researcher, Center for Leadership Development and Research, Stanford GSB.
Published: November 13, 2012
Americans tend to admire powerful leaders. Powerful leaders are seen as exerting influence over their organizations and shaping outcomes around them. CEO power can be exercised across a wide spectrum of decisions, including those regarding corporate strategy, operations, acquisitions, organizational design, culture, and governance.
However, it is not clear the extent to which having a powerful CEO is beneficial to an organization. CEO power can be positive or negative, depending how it is manifested and how it is exercised.
We examine this topic in greater detail, and ask:
- Are shareholders better or worse off with a powerful CEO?
- Where should the board draw the line between giving its CEO discretion and providing appropriate oversight?
- How much power is too much power?
Read the Closer Look and let us know what you think!