Upper Echelons in Crisis: Do Executive Characteristics Drive Firm Value in the Primary Sector During the COVID-19 Pandemic?

Abstract

The COVID-19 pandemic has intensified uncertainty in Indonesia's primary sector, making executive leadership an increasingly important determinant of firm resilience and market valuation. Grounded in Upper Echelons Theory (UET), this study investigates the influence of CEO characteristics—education, tenure, and age—on firm value and examines whether the COVID-19 pandemic strengthens these relationships. The study employs a quantitative approach using balanced panel data from 80 mining and agricultural companies listed on the Indonesia Stock Exchange (IDX) over the period 2015–2024 (800 firm-year observations). Firm value is measured using Tobin's Q, while CEO education, tenure, and age serve as the independent variables. The COVID-19 pandemic is modeled as a moderating dummy variable, with firm size, leverage, and profitability included as control variables. Panel data regression with the Fixed Effect Model (FEM) and robust standard errors is applied following model specification and diagnostic tests. The findings reveal that CEO education and CEO tenure have significant positive effects on firm value, whereas CEO age has no significant influence. Furthermore, the COVID-19 pandemic significantly strengthens the positive relationships between CEO education and firm value as well as between CEO tenure and firm value, indicating that leadership quality becomes more valuable during periods of heightened uncertainty. These findings extend the application of Upper Echelons Theory to emerging markets by demonstrating that investors place greater value on executives with superior cognitive and experiential capabilities during systemic crises. The study provides practical implications for corporate boards, investors, and policymakers in strengthening executive selection and corporate governance strategies to enhance organizational resilience.