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Too Comfortable in the Saddle? The Effect of CEO Tenure on Board Attributions of Poor Performance
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Author: Yameng Zhang, U. of Glasgow
Author: Trevor Buck, Loughborough U.
Author: Juan Ignacio Canales, U. of Glasgow
Author: Stephan Von Delft, U. of Glasgow Adam Smith Business School
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This paper studies the relationship between CEO tenure and the attributions that boards make regarding performance, i.e. it analyzes the causes of poor performance as interpreted by boards. This is important because several studies have focused on boards’ disciplinary actions while discussing whether boards are able to hold long-tenured CEOs accountable for poor firm performance. However, less attention has been directed at boards’ attributions of poor performance that may precede such actions. Board attribution data was collected from 973 annual reports of poorly performing Chinese high-tech listed firms between 2007 and 2013. Findings show that, with longer CEO tenure, boards are actually more likely to attribute poor performance to internal, CEO-related factors, rather than to external, environment-related ones. These findings are consistent with the assumption that CEOs’ increasing obsolescence with tenure possibly weakens boards’ allegiances towards CEOs, and decreases CEO influence over board attributions of poor performance. The moderating effects found for instability of prior performance and industry dynamism largely support this explanation. The study contributes to the board governance literature by highlighting the role of cognition prior to disciplinary behavior in board governance.
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Search Terms: CEO tenure | Board attribution
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Paper is No Longer Available Online: Please contact the author(s).
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When Blood Is Thicker: Top Management Team Nepotism and Firm Growth in a Transition Context
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Author: Peder Greve, Henley Business School
Author: Winfried Ruigrok, U. of St. Gallen
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In this study, we outline how top management team (TMT) nepotism may contribute to firm growth in the context of early-stage economic and institutional development. Based on a combination of resource-based and institutional perspectives, we argue that kinship relations in TMTs is an important antecedent of firm growth in an early-stage development context. Our empirical study is based on a unique dataset of 63 of the 100 largest Albanian firms in 2009, including detailed information on TMT composition in 2009 and subsequent firm growth data. We find support for our hypotheses that TMT nepotism is positively associated with firm growth, and that the nepotism-growth relationship is negatively moderated by an urban location of headquarters and higher proportions of foreign-educated TMT members. The paper concludes with a discussion of theoretical and practical implications of our findings, as well as suggestions for future research.
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Search Terms: firm growth | top management teams | nepotism
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Paper is No Longer Available Online: Please contact the author(s).
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Till Death Do Us Part: The Effect of CEO Divorce on Firm Performance
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Author: Ingo Kleindienst, Aarhus School of Business and Social Sciences
Author: Kaleb Girma Abreha, Aarhus School of Business and Social Sciences
Author: Denis Schweizer, John Molson School of Business, Concordia U.
Author: Juliane Proelss, John Molson School of Business, Concordia U.
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This study examines the effect CEOs’ private life events have on their firms’ economic performance. In particular, we exploit a quasi-natural experiment provided by CEO divorce. Using a comprehensive panel data on CEOs and families of CEOs for Danish firms between 1999 and 2011 and applying a difference- in-differences methodology, we find that CEO divorce negatively affects firm economic performance. We also find that the negative effect is aggravated by the presence of children in the CEO household. However, contrary to our expectation, we do not find an effect of wage difference between CEO and spouse. Overall, the results point to the existence of a CEO professional life – private life interaction and highlight that CEOs’ private life events matter for firm behavior and economic performance.
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Search Terms: CEO | Divorce | Economic Performance
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Paper is No Longer Available Online: Please contact the author(s).
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Is Blood Thicker Than Water? Sibling Rivalry and Strategic Change in Family Business Groups
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Author: Seok Jin Ko, Seoul National U.
Author: Sun Hyun Park, Seoul National U.
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This paper emphasizes relational aspect of competitive dynamics to investigate the rivalry that is inherent between sibling executives within family owned business groups. We focus on the family CEOs¡¯ unique role both as a member of the kin and a professional manager responsible for their own companies. In particular, we examine how the strategic change pursued by family CEOs prompts his sibling CEO to respond and also enact strategic change at another group-affiliated firm. We further theorize how the similarity of sibling CEOs in terms of potential managerial capabilities and the relative sibling birth order strengthens this relationship due to the increase in reference group salience and enhanced social comparison. At the organizational level, we also investigate how the abundance in resource niche opportunities for family CEOs and the presence of a group leadership succession plan weakens the effect of sibling rivalry on strategic change. Our empirical context utilizing listed family-controlled firms in Korean business groups (chaebols) provides strong support for our theoretical perspectives. We discuss our study¡¯s contribution to the studies of market rivalry, socio-cognitive bias in competitive interaction, and family controlled business groups.
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Search Terms: family business group | upper echelon | competition
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Paper is No Longer Available Online: Please contact the author(s).
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