The Economic Relevance Of Chief Marketing Officers In Firms Top Management Teams

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John Abernathy
Tom Kubick
Adi Masli

Keywords

Chief Marketing Officer, Top Management Team, Shareholder Wealth, Performance Attribution Analysis

Abstract

Management theory suggests that the presence of the Chief Marketing Officer in the Top Management Team reflects a corporate emphasis on marketing and customer relations. Finance theory suggests that this emphasis should translate into additional shareholder wealth. However, prior research has failed to document such a relationship. Using performance attribution analysis, the authors construct a long-short portfolio that buys (sells) stocks of firms with (without) a Chief Marketing Officer in the Top Management Team and find this investment strategy would have earned risk-adjusted excess returns of approximately 3%. Additional analyses suggest the value of having a Chief Marketing Officer in the Top Management Team manifests primarily among firms with high operating margin, low asset turnover, high profitability, high R&D intensity and high advertising expenses. The authors conclude that having a Chief Marketing Officer in the Top Management Team has a positive impact on shareholder wealth.

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