Announcements Of Appointments Research Articles

Top managers' environmental experience and corporate environmental violations: Evidence from China

This study examines the effect of top managers' environmental experience on corporate environmental violations. We find that top managers' environmental experience is negatively associated with the likelihood and frequency of corporate environmental violations in China. Our conclusions are robust after addressing the potential endogeneity problems through matched-sample analyses and the difference-in-differences approach. Furthermore, the mechanism analyses show that top managers with environmental experience reduce corporate environmental violations by improving firms' environmental awareness, environmental expertise, and resources. Moreover, we find that the negative association between top managers' environmental experience and corporate environmental violations is more pronounced when firms face lower corporate governance pressure or when firms are subject to weaker government environmental governance pressure. Finally, we find that shareholders react much more positively to the appointment announcements of top managers with environmental experience, suggesting that the stock market does value top managers' environmental experience. Our findings offer important implications by showing that it is helpful to hire top managers with environmental experience to improve firms' environmental sustainability, which could be important for other emerging markets, which, like China, are facing increasing environmental deterioration.

A reinvestigation of the stock price reactions to announcements of Black top executive appointments

We investigate the stock market reactions to the announcements of Black CEO and top management team (TMT) appointments in light of two conflicting studies that advance competing and opposite theories. In 2021, Gligor and colleagues theorized that reactions will be negative due to racial stereotyping, and found negative mean stock price reactions for both Black CEOs and TMTs. Conversely, in 2023, Jeong and colleagues theorized that the stock market will respond positively to the appointment of Black CEOs, because these CEOs have to meet a “higher bar” to be appointed. They reported a positive mean reaction to such appointments. In our quasi-replication of these two prior studies, we find a reliably positive mean reaction for Black CEOs but an immaterial median reaction, and no marginal stock price impact to the announcement of the appointment of a Black CEO and TMT executives after controlling for explanatory factors that go outside the racial bias and higher bar theories. In light of the fragility and lack of robustness in these results, we recommend that future research in the area of Black top executives and the stock market be cautious when presenting and interpreting results.

CEO networks and the labor market for directors

Directors at firms with well-connected CEOs are more likely to obtain directorships at firms that are connected to the CEOs. Recommended directors do not become beholden to the CEO. Reciprocity is an important determinant of recommendations because CEOs are more likely to recommend their directors if they received help from their network filling vacant board positions. CEOs also benefit strategically from the additional appointments of their directors. Analyses of appointment announcement returns and director election results show that shareholders are not concerned by such recommendations. The results highlight the importance of CEOs as intermediaries in the director labor market. • CEOs function as intermediaries in the director labor market. • Well-connected CEOs recommend their directors to firms linked to the CEO. • Recommended directors do not become beholden to the CEO. • CEOs recommend their directors for strategic and reciprocity purposes.

The Impact On Firm Value Of Announcements Of The Appointment Of An Information Technology Officer (Cxo) To The C-Suite

Technology-enabled disruptions have created challenges for firms in all industries and often originate from firms outside a firm's known competitors. Senior technology executives are often charged with leading the firm's response to these competitive threats, leveraging technology to drive innovation and create value. In recent years, senior technology leaders have emerged in the Top Management Teams (TMT), including the traditional roles of Chief Information Officer and Chief Technology Officer, and the emerging roles of Chief Data Officer, Chief Digital Officer, and Chief Innovation Officer, collectively referred to as CxOs. Researchers have begun examining the impact of CxOs using event study methodology and comparative studies of firm performance against peer groups. This research examines the impact of the presence of a CxO on firm outcomes with an event study, using, for the first time, the Fama-French 5 Factor model to examine announcements of CxO appointments, and finds that the firm announcements of CxO appointments result in significantly negative abnormal returns. This research adds to the growing research on how firms create value across both traditional and emerging CxO roles, identifying the role, firm, and industry factors that influence value judgments and the subsequent market reactions to a firm's announcement of the appointment of a CxO. The firm announcement of a CxO appointment appears to be perceived as a sign of potential instability, and therefore a risk to the important business/technology integration of these important roles.

Impact of CISO Appointment Announcements on the Market Value of Firms

Previous studies concerning the economic impact of security events on publicly listed companies have focussed on the negative effect of data breaches and cyberattacks with a view to encouraging firms to improve their cyber security posture to avoid such incidents. This paper is an initial study on the impact of investment in human capital related to security, specifically appointments of chief information security officers (CISO), chief security officers (CSO) or similar overall head of security roles. Using event study techniques, a dataset of 37 CISO type appointment announcements spanning multiple world markets between 2012 and 2019 was analysed and statistically significant (at the 5% level) positive cumulative abnormal returns (CAR) of around 0.8% on average were observed over the three-day period before, during and after the announcement. Furthermore, this positive CAR was found to be highest, at nearly 1.8% on average, within the financial services sector and showing statistical significance at the 1% level. In addition to the industry sector, other characteristics were investigated such as job title, reporting structure, comparison of internal versus external appointments, gender and variations between markets. Although these findings were not as conclusive they are, nevertheless, good pointers for future research in this area. This overall positive market reaction to CISO related announcements is a strong case for publicly listed firms to be transparent in such appointments and to, perhaps, review where that function sits within their organisation to ensure it delivers the greatest benefits. As 24% of the firms analysed were listed outside the US, this study also begins to counter the strong US bias seen in similar and related studies. This research is expected to be of interest to business management, cyber security practitioners, investors and shareholders as well as researchers in cyber security or related fields.

Does it Pay to Have CIOs on the Board? Creating Value by Appointing C-Level IT Executives to the Board of Directors

In an increasingly digital world, C-level information technology experts (CITEs) such as CIOs and CTOs are playing an increasingly indispensable role in leading IT initiatives. Despite this, recent research shows a lack of oversight by the board of directors over the IT function due to the “IT confidence gap” of directors with no IT expertise. This has resulted in the emergence of a recent trend of appointing CITEs to the board of directors. However, there is little research on whether such appointments result in value creation for the appointing firms. We use perspectives from agency and resource dependence theories to examine two value impacts of CITE director appointments to address this question. We suggest that CITE director appointments create signaling value by enhancing the firm’s ability to signal their intention to institute more effective oversight of the IT function and subsequently accumulate value in the form of share price reaction to appointment announcements. Correspondingly, CITE directors’ human and relational capital application also creates substantive value in the form of firm financial performance over a longer duration. Using an event study and hierarchical linear modeling, our analysis of 334 CITE director appointments largely supports our contention that the human and relational capital of CITE directors and their appointment in firms facing IT-related contextual conditions results in both a positive share price reaction and better firm financial performance over the long term. We conclude that appointing CITE directors with the appropriate capital under certain contextual conditions leads to firm value creation.

Female CEO and Market Reaction

This study aims to examine market reaction to the announcement of female CEOs appointment at companies listed on the Indonesia Stock Exchange (IDX) over the period 2010-2018. The first test uses event study analysis through t-tests using the one-sample t-test method. It was found that the market reacts negatively to the announcement of the appointment of a female CEO. Moreover, further tests are carried out to determine the factors which influenced the negative reactions, such as the characteristics of the female CEOs themselves coupled with the characteristics of the company as the control variable. The results of the regression analysis show that the characteristics of female CEOs in the form of family relations with the board of commissioners have a negative effect on market reaction. While other characteristics such as age and education of the female CEOs do not affect the market reaction. Other additional information shows that company size also has a negative effect to market reaction. Things that need to be considered by companies when they want to appoint a woman as CEO is if the candidate for CEO has a family relationship with the board of commissioners. The size of the company also needs to be considered. The bigger the size of the company, the presence of a female CEO is also increasingly in doubt because it is considered to interfere with the company's existing operations and strategy.

The influence of investors’ opinions of human capital and multitasking on firm performance: a knowledge management perspective

PurposeThe purpose of this study is to examine the disruption-adaptation associated with knowledge management (KM) of entrepreneurial multitasking of top strategy and tactics executive (TSTE) succession in positions responsible for both S and T. This provides insight into KM and firm performance during turbulent periods.Design/methodology/approachThe study examines investor’s opinions of human capital in the context of managerial succession. The data was based on 900 publicly available appointment announcements between 2006–2014, allowing for the examination of 459 observations of succession in 51 industries.FindingsThe findings indicate that the relationship between KM of entrepreneurial multitasking and firm performance was more positive for high innovation firms than for low innovation firms. As well, the relationship between investors’ opinions of a top executive manager’s human capital and firm performance is more positive for small firms than for large firms and more positive for high innovation firms than for low innovation firms.Research limitations/implicationsThe study contributes to the literature by systematically examining the announced appointment of executives in one context where KM of entrepreneurial multitasking is prevalent – across marketing strategy and sales tactics (hereafter, S and T) responsibilities – for multiple firms listed at major US stock exchanges across a wide range of industries, using lagged performance data to discern performance outcomes. It highlights important issues related to organizational structure and human capital for firm performance and KM in dynamic environments. Further research could examine the impact on firm performance of a change in structure – from a joint sales and tactics position to a sales or tactics position and vice versa. By studying the impact of change to and from an intertwined position, future scholars can determine the level of risk stemming from coordination uncertainty changes with time.Practical implicationsOf practical relevance, the study shows that vesting dual responsibility for S and T in one executive during managerial succession may not be as universally valuable or adaptive as previously thought. One practical extension of this research may also be that larger firms that are more likely to have clearly defined silos may find that such vesting of multitasking responsibility not as valuable. High innovation and small firms may gain from new executives’ multitasking responsibility for S and T. Thus, firms should think twice before vesting S and T responsibilities with one incoming executive during the leadership change.Social implicationsResponsibility for both S and T compounds ambiguous accountability, frequently leaving the locus of customer-related problems unclear, and therefore unsolved.Originality/valueExtant research has overlooked the relationship between the top management team’s (TMT) abilities to multitask firm performance over time across contexts of external and internal change, operationalized as firm innovation and firm size. Nor have studies explored the firm performance implications of external stakeholders’ opinions of such human capital across these contexts. A novel measure of executive-specific human capital – abnormal returns generated the appointment announcement, is introduced. Understanding the capability of a top executive to simultaneously multitask both S and T responsibilities is a critical component of KM; also relevant are investors’ opinions of their human capital, a particular oversight given the challenge of the “great transformational leader” with servant leadership theory (Carayannis et al., 2017; Gregory Stone et al., 2004).

Does Gender Diversity in the Boardroom Matter? Evidence from CEO Inside Debt Compensation

We argue gender-diverse boards are associated with distinct preferences that reassure investors about their commitment to moderate risk and boost long-term corporate survival. Results suggest a strong relation between gender-diverse boards and bondholder-aligned CEO compensation components, particularly when CEOs have greater incentives to take and shift risk. This association is robust to a variety of controls for potential endogeneity, and is more pronounced when women directors are on compensation committees, regularly attend meetings and have influential backgrounds. Compensation spillovers occur with gender-diverse boards choosing similar peers. Bond and stock prices increase around female director appointment announcements, especially for high-yield issuers.

When Do Appointments of Chief Digital or Data Officers (CDOs) Affect Stock Prices?

This article investigates the stock market reaction to appointments of newly created chief digital or data officer (CDO) positions. The analysis is based on a sample of 112 CDO appointment announcements by publicly traded companies listed in the US stock market from 2004 to 2017. We ground our arguments in signaling theory along with the institutional entrepreneurship and synergy and redundancy perspective to understand the factors that could influence the market reaction to CDO appointments. Although the results show that the stock market reacts neutrally to announcements of newly created CDO positions, the market does react positively under certain conditions. The market reacts positively when appointing firms exhibit high growth prospects. The article supports the redundancy perspective, and the results show that the market reacts positively when a potentially conflicting and overlapping role such as chief information officer (CIO) is absent in appointing firms. Our analysis also shows that when CIO is absent, the market reacts more positively to outsider CDO relative to insider CDO, thereby indicating the interaction between redundancy and institutional entrepreneurship perspectives.

When do appointments of corporate sustainability executives affect shareholder value?

AbstractOver the last two decades, firms have been appointing corporate sustainability executives (CSEs) to be part of their top management teams. Although there is a vast literature on sustainable practices and their relationships with various measures of firm performance, little is known about the nature of the empirical link between CSE appointments and financial performance. We add to the understanding of this link by estimating the stock market reactions to a sample of 115 announcements of CSE appointments made by firms during the period 2000–2018. Our findings using event study methodology, followed by regression analyses, suggest that although the stock market reaction to CSE appointments is not significantly different from zero, the stock market reacts more, or less positively under certain firm‐ and industry‐specific conditions. We find that the stock market reaction is more positive in instances where the announcing firms faced a prior adverse sustainability‐related incident, and less positive for announcing firms that operate in industries that face relatively higher levels of regulatory sanctions. Also, we find that the stock market reaction is more positive when firms announce CSE appointments with focused as compared to broad responsibilities. Additionally, we find that CSE appointments are associated with subsequent improvements in operating performance—partly driven by a decrease in total costs and partly by an increase in sales. Overall, our findings support the strategy of appointing CSEs to top management teams and enable executives and stakeholders to more deeply understand the shareholder value and operating performance effects of appointing CSEs.

Professional Directors and Governance Quality

ABSTRACTWe examine professional directors—board members with no employment outside of serving as independent directors. We find that boards with a higher percentage of professional directors engage in more acquisitions, experience lower acquisition announcement returns, and exhibit lower performance‐turnover sensitivity and lower financial performance. We also examine the returns surrounding the appointment‐announcement dates of professional directors and find that firms experience significantly lower cumulative abnormal returns upon the appointment announcement of professional directors as compared to nonprofessional directors. The negative returns are primarily experienced by firms that face greater agency issues, suggesting that the market does not value professional directors for stricter monitoring. Overall, our findings do not lend support for calls to professionalize corporate boards.

Joint marketing and sales appointment: Uncertainty from intertwining of marketing and sales in one position

The integration of diverging thought worlds of marketing and sales can have many synergistic benefits for industrial firms. However, intertwining marketing and sales in one position introduces coordination costs—costs that have, for the most part, been ignored by the existing B2B literature. The authors argue that appointment announcements of new executives to joint marketing and sales positions (M&S) puts these costs in stark relief, especially relative to new marketing-only (M) or sales-only (S) appointments' announcements. Leveraging event-study methodology and latent instruments, this research examines secondary data on over 800 executive appointment announcements, 436 of which are related to marketing and sales. The authors find that new appointments to joint M&S positions introduce hard to simultaneously balance change across diverging thought worlds that results in uncertainty and hurt firm value. Drawing on structural-contingency framework, this study finds that less formalization of tasks, represented by insider status of an appointee, can mitigate this disruption, by stabilizing structures during change. Furthermore, specialization in B2B marketing technology weakens the negative effect of announcements of joint M&S appointments, because such positions lean heavily towards sales and thus require less coordination between the two functions. However, specialization with respect to industry environment, represented by market concentration, exacerbates the disruptive effect of appointing new executives to joint M&S positions.

President's Page

Back at the end of May, you may have noted the announcement of my appointment as SEG's new executive director based at our headquarters in Tulsa, Oklahoma. I would like to thank all those who have extended such a warm welcome to me. My excitement in the role has grown daily, and it remains a great honor to me to serve in this capacity. I have just concluded my first 90 wonderful days with SEG and wanted to share with you my experiences and observations as well as my thoughts for our future.

Do CEOs' Outside Directorships Affect the Performance of Their Own Firms?

The practice of CEOs serving on the board of other public companies has raised concerns from investors and proxy advisory firms about the potential harm to shareholders. In this paper, I analyze the change in performance of CEOs’ own firms after their appointment as an outside director at another firm. Using the distance to appointing firms’ headquarters as an instrumental variable for directorship appointments, I find that CEOs' own firms exhibit improvements in operating performance following their first appointment and the announcements of such appointments have a positive stock price reaction. Subsequent appointments do not result in performance declines. Performance improvements following the first appointments are stronger in cases where the appointing firm is relatively larger and where the appointing firm operates in vertically related industries. These findings resolve concerns from investors and show that CEOs’ own firms can benefit from their outside directorships through CEOs' learning and information sharing.

The Importance of Network Recommendations in the Director Labor Market

Directors are more likely to obtain additional directorships, especially at prestigious firms, if the CEOs of their current boards are well-connected. Recommended directors do not become beholden to the CEO, as CEO compensation is unaffected and an analysis of appointment announcement returns and director election results show that shareholders are unconcerned by such recommendations. Instead, reciprocity is an important determinant because CEOs are more likely to recommend their directors if they recently received help from their network filling vacant board positions. Overall, there is little evidence that network recommendations of directors lead to inefficiencies in the director labor market.

Returnee CEOs Under Weak Institutions: Blessing or Curse?

This paper studies CEOs with overseas experience, known as returnee CEOs. We show that Chinese returnee CEOs are associated with inferior performance, lower market reactions to appointment announcements and an adverse regulatory environment. We argue that CEOs’ international expertise is acquired at the opportunity cost of local social capital, such as political and business ties, which is more critical than expertise in transition economies with weak legal institutions. The negative effect disappears when social capital is acquired, regional legal institutions are strong or returnees’ international expertise is in demand. Exploiting an exogenous increase in the supply of returnee talent as a result of new provincial policies, we find the results consistent.

When does CEO endorsement of sales & marketing leaders help firms? The role of heavy marketing emphasis

The purpose of this paper is to examine the impact of CEO endorsement (measured by the presence of a CEO quotation in a press release) of sales and marketing leaders on firm performance when the organization has a heavy marketing emphasis. Our study on over 800 appointment announcements shows that enhanced expectations raised by the CEO's endorsement of sales and marketing leaders suffer a mismatch with high customer relationship turbulence due to changes in the sales and marketing organization. We find that CEO endorsement of sales and marketing appointment announcements at firms with a heavy marketing emphasis hurts firm performance in the year-end. The findings also reveal that CEO endorsement hurts in both the immediate and year-end horizons, since CEO endorsement as a measure of internal, firm-level assessment has the perception of being uninformed and subjective. Extant research has studied the impact of appointment announcements on firm performance, while neglecting the role of CEO endorsement. Thus, this study has implications for the appointment of sales and marketing leaders who under certain conditions could enhance the expectations of the firm's continued existence in a market. Theoretically, we contribute by developing a field at the intersection of research related to sales and marketing managerial succession, endorsements and corporate announcements. We emphasize the role of a new construct - CEO endorsement - on firm performance given a heavy marketing emphasis context.

Do Outside Directors with Government Experience Create Value?

AbstractWe examine whether outside directors with government experience add value to their firms. We find that government directors are more likely to miss board meetings and that their appointment announcements are greeted more negatively. Firms with government directors also experience poorer operating performance and more negative merger announcement returns, although their mergers are less likely to be challenged by antitrust authorities. These adverse valuation effects are largely alleviated when firms have large government sales, when they operate in regulated industries, or when government directors are politically connected. Using close gubernatorial election outcomes as a natural experiment and an instrumental variables approach to control for endogeneity bias do not change the results.

Investor response to appointment of female CEOs and CFOs

We study the impact of appointing women to top executive positions from an investor perspective. We analyze whether shareholders value announcement of appointment of women to top positions differently than they do appointment of men. This study uses an international sample of 100 announcements of top executive appointments of women who replace men and investigates how shareholders respond to such appointments. This research combines an event study with a matched pair analysis to compare the response from investors regarding appointment of female versus male CEOs and CFOs. We establish that investors do not seem to value appointment of women significantly differently from that of men. This finding suggests that, from the investor perspective, there appears to be no business case for a particular gender when it comes to appointing a CEO or CFO.