Government awards to CEOs

Abstract

This paper investigates the value and corporate governance consequences of government awards for a sample of French CEOs appointed to the national Order of the Legion of Honor (Légion d'honneur). Short-term market reactions surrounding award announcements are significantly positive, whereas the valuation of firms with awarded CEOs is greater than that of (matched) firms with nonawarded CEOs. We explore the channels through which government awards create value and find evidence that they provide awarded CEOs and their firms with increased political access. We also observe that government awards are associated with better corporate governance in that awarded CEOs are more likely to be fired for poor performance. The negative effects that have been documented for media awards and are associated with CEOs’ superstar status do not seem to apply to state awards.