What do outside CEOs really do? Evidence from plant-level data

Using rich plant-level data, we analyze the relative performance of firms with inside and outside CEOs. We show that firms with outside CEOs achieve greater productivity improve-ments compared to firms with inside CEOs. Contrary to conventional wisdom, the rela-tion is stronger in well-performing, rather than poorly performing, firms. Although part of the productivity growth differential comes from divesting low-performing, peripheral, low-tech, and unionized plants, most productivity improvements arise from streamlining continuing plants. Here, productivity is increased by consolidating products, changing the composition of investments toward newer capital, shifting to more capital-intensive pro-duction, adopting structured management practices, and improving labor productivity.(c) 2022 Elsevier B.V. All rights reserved.