Executive Appointments Research Articles

The Impact of Firms’ Digital Transformation on Executive Appointment Decisions

The Impact of Firms’ Digital Transformation on Executive Appointment Decisions

Women at Multiple Levels of Strategic Leadership: Evidence of Gender Spillovers

ABSTRACTManuscript TypeEmpirical.Research Question/IssueWe examine how the combined presence of women in multiple levels of strategic leadership, including gender‐diverse boards, affects firm accounting performance.Research Findings/InsightsOur meta‐analysis of 273 effect sizes across various hypotheses expands research on women in upper echelons by showing that gender‐diverse boards are positively related to gender spillovers, that is, the appointment of female executives. Most importantly, our work demonstrates that gender spillovers mediate the relationship between board gender diversity and firm performance, indicating there are joint effects of women leaders when serving at various levels of the organization simultaneously. We also find that the size of gender‐diverse boards negatively affects gender spillovers to the level of executives.Theoretical/Academic ImplicationsOur research highlights interdependencies between gender diversity at different organizational levels and the distinct contribution of women directors. We draw attention to the role of gender spillovers as a mechanism that helps explain how the appointment of women directors benefits firm performance. Our findings broadly contribute to upper echelons theory.Practitioner/Policy ImplicationsThis study emphasizes that increasing the representation of women on boards can advance the cause of women at other levels of strategic leadership. Furthermore, if women are in multiple levels of strategic leadership at the same time, this can lead to improved firm performance.

Executive turnover, internal control and accounting information comparability

AbstractThis paper aims to explore the causality between executive turnover and accounting information comparability (AIC) within the context of Chinese‐listed companies. The evidence with robustness tests strongly supports that the executive turnover hurts accounting comparability of corporations. These effects are more salient in the subsamples of non‐state‐owned and non‐high‐tech firms relative to state‐owned and high‐tech ones. The negative effects of executive turnover on AIC are restrained given less internal control weakness. The findings highlight the role of internal controls in ensuring AIC, and offer insights to inform the formulation of related management policies following a new executive appointment.

CFO SERVING AS BOARD SECRETARY AND ENTERPRISE SUSTAINABLE DEVELOPMENT PERFORMANCE

This study utilizes data from Chinese A-share listed companies from 2010 to 2020 as research samples to explore the impact of CFOs serving as board secretary on the quality of information disclosure, financing constraints, and enterprise sustainable development performance. The empirical results indicate that CFOs holding the additional role of secretary of the board significantly enhance the financial performance and environmental and social responsibility performance of companies. The quality of information disclosure and financing constraints act as mediators between the dual role of the CFO and sustainable development performance. Heterogeneity analysis finds that in non-state-owned enterprises and small and medium-sized enterprises, the effects of CFOs serving concurrently as secretaries of the board on improving financial performance, environmental social responsibility performance, information disclosure quality, and alleviating financing constraints are more pronounced. The findings of this study delve into the impact of the dual role of CFOs on sustainable development performance, enrich the literature in the relevant field, and provide valuable theoretical basis and practical guidance for the selection and appointment of corporate executives, tailored for journal publication requirements.

Quantitative measures of discrimination with application to appointment processes.

Bias and discrimination in appointment processes such as hiring decisions (and analogous selection procedures for performance evaluations, promotions, scholarships, and awards), are quantified statistically via the binomial distribution. These statistical measures are described and an easily used webapp for calculating them is provided. The measures considered include the likelihood that a given number of appointments arose from a fair process and the likelihood that an existing process would give rise to a fair outcome if it were repeated. These methods are illustrated by applying them to sex (including gender) discrimination and racial discrimination in senior appointments in the Australian university sector; both conscious and unconscious biases are included. Significant sex discrimination is found to have existed in the appointments of university chief executives (Vice Chancellors) who were in office in 2018, but with a moderate chance that current processes will yield fair outcomes in the future. However, there is no evidence of strong sex discrimination in the country's eight main research universities for senior appointments (i.e., Faculty Deans and members of their governing Boards or Senates) for those in office as of 2021. However, at the same dates, extreme racial discrimination was implicit in the selection procedures for both Vice Chancellors and senior appointments in all these universities. The University of Sydney's senior appointments were found to have had the most racially biased outcomes among the country's eight main research universities. Significantly, there is negligible statistical likelihood of achieving racially unbiased outcomes in the future in any of the contexts considered, unless the selection procedures are significantly modified.

Environmental disclosure practices in mixed ownership models: A study of Chinese private enterprises.

Environmental information disclosure is critical avenue for stakeholders to gauge the fulfillment of corporate environmental responsibilities, as well as a key path for companies to gain social reputation and achieve sustainable development. To achieve both economic and social sustainability and improve the environmental information disclosure by private firms, this study delves into the impact mechanism and realization path of mixed ownership reform on environmental information disclosure among Chinese private enterprises listed between 2010 and 2020. Utilizing a panel fixed effect model, we scrutinize the interplay between state capital involvement and the disclosure of environmental information by private enterprises. Our findings reveal that state capital involvement may encourage private enterprises to disclose environmental information through resource allocation and governance improvements. The higher the shareholding ratio of state-owned participating shareholders, the more it helps private firms to disclose environmental information. State-owned shareholders play a pivotal role in the appointment of supervisors, directors, and executives, effectively improving corporate governance mechanisms and positively moderates how private companies with state-owned capital participate in disclosing environmental information. Moreover, the magnitude of media coverage and the public opinion pressure faced by private enterprises further amplify the influence of state-owned capital involvement on environmental information disclosure. Additionally, our research reveals that corporate profitability partially interplays with the effects of state-owned capital disclosure of environmental information by private companies. According to the research results, we recommend that the government proactively promote mixed ownership reform with private enterprises as the main participants, fully leveraging the resource advantages and influence of state-owned capital. At the same time, it is imperative to strengthen the governance effect of internal state-owned shareholders and external public opinion supervision in private enterprises. Enhancing profitability is also identified as a key driver for private enterprises to engage in more robust environmental information disclosure practices.

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.

Tainted Executives as Outside Directors

ABSTRACT We examine outside board appointments of executives allegedly involved in governance failures—“tainted” executives—to shed light on appointing firms’ underlying motivations. Less attractive firms and those with greater advising needs are more likely to appoint tainted executives to their boards than other firms are. Tainted appointees are less likely to be placed on the nominating and governance committees than nontainted appointees. Tainted appointees have similar or better skill sets compared with nontainted appointees. Firms that appoint tainted executives to their boards display an improvement in operating performance in the postappointment period relative to the preappointment period and relative to a matched control sample. We do not find evidence of poor monitoring outcomes for these firms. Overall, our evidence suggests that board needs, not a conspicuous attempt to weaken monitoring, drive the appointment of tainted executives to boards. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G34; K22; M41.

Judges Guarding Judges: Investigating Regional Harbours for Judicial Independence in Africa

AbstractA body of jurisprudence is emerging in Africa's most active regional courts on the independence of national judiciaries. This article reveals that while regional case law relevantly echoes efforts by municipal courts to safeguard themselves, circumstances demonstrate that such case law requires greater contextualization across systems. In this regard, the traditional paradigm of linking independence to executive appointments does not empirically stand the test of the multiplicity of independence factors, executive-free regimes have not proved effective in safeguarding independence, and legal traditions or judicial systems have increasingly become irrelevant to the effectiveness of any independence regime. Factors that transcend the traditional determinants of executive control include the nature and functions of the court involved, and the history and background of the judicial structure of the country or region. Notably, the discussion also reveals the need to strike a critical balance between individual rights to a fair trial and inter-state directive policy towards judicial independence as set out in the African Charter.

Aleatoric governance: using lotteries to break the iron law of oligarchy

Abstract Michels’ iron law of oligarchy states that political organizations tend inexorably towards oligarchy, to the likely detriment of the organizations themselves and, by extension, to the detriment of society more broadly. We suggest focal randomization as a historically proven countermeasure: a lottery decides who wins promotion from a preselected pool of highly qualified candidates. We draw on a historical case to assess the efficacy of focal randomization in eroding power monopolization and elite closure in 18th-century Basel, Switzerland. To combat widespread nepotism, starting in 1688, the city implemented a series of partly randomized selection regimes that were routinely applied in executive appointments to the city’s administration until 1798. Using data on all 2,587 appointments to the main governing body of the city between 1650 and 1798, we analyse how each selection regime affected elite closure. Our findings indicate that the targeted use of elements of chance in executive appointments eroded the elite’s ability to monopolize access to the highest political positions. Before the introduction of focal randomization, candidates from Basel’s elite were 4 times more likely to be appointed to top positions than candidates from non-elite families. After the introduction of focal randomization, the elites’ advantages declined, and members of non-elite families tripled their chances of advancing to the highest office. However, our study also cautions that this effect depended on several design choices. Focal randomization is effective in settings in which a surplus of qualified candidates competes for a limited number of coveted positions.

Personal Power in Africa: Legislative Networks and Executive Appointments in Ghana, Togo and Gabon

AbstractPersonal relations and networks have long been argued to dominate African politics. Since personal power is difficult to measure, much of the literature has remained either anecdotal or has used ethnicity to approximate power distributions. This article is proposing a social network approach to the analysis of personal power in legislatures and cabinets in three cases: Ghana, Togo and Gabon. We combine survey data on parliamentary discussion networks with a new data set on cabinet appointments. We find that power accumulation in one institution correlates with power accumulation in the other in all three countries, irrespective of the level of democracy: individuals build up a unique power base to advance their careers. We also find differences between the modes of power accumulation and elite integration across our cases. Our findings could stimulate new debates on personal power, regime survival and elite reproduction across different regimes.

Understanding Top Management Teams' Characteristics for Effective Turnaround Management

The recently witnessed economic downturn prompted by the COVID-19 pandemic rekindled the interests of management professionals, policymakers, academicians, and researchers in corporate turnaround management. Hence, this study aims to ascertain the top management teams' characteristics for an effective turnaround in the manufacturing sector. Exploratory research design supported this study whereby 16 key informants were recruited for interviews. Adopting thematic analysis, the qualitative results showed the key five top management teams' characteristics for effective turnaround management, namely gender, personal features, educational qualifications, age, and experience. With these results, the study concludes that the heterogeneity of top management teams has a direct bearing on the successful turnaround attempts in the manufacturing sector during an economic crisis. As such, the study recommends the appointment of senior executives based on experience, age, gender, personal features, and educational qualifications.

International environmental complexity and the demand for generalists and specialists in executive selection

AbstractResearch SummaryThis study investigates the selection of generalists and specialists as an organizational response to the complexity of firms' international operations. Drawing on the concept of executive job demands, we identify institutional ambiguity and economic sophistication as two distinct sources of country environmental complexity resulting from a firm's foreign investment and predict how they affect the selection of new executives at multinational firms. Our hypotheses associate institutional ambiguity and economic sophistication with the appointment of executives with generalist and specialist backgrounds, respectively. We also examine how the two sources of environmental complexity interact and test multiple alternative specifications to enhance our understanding of environmental complexity as a determinant of executive job demands in the context of international business. Our empirical analyses are performed on a sample of 436 executive appointments occurring in 132 UK‐based manufacturing firms, observed between 2008 and 2018. Findings show general support for our main hypotheses. We discuss the theoretical and practical implications of our findings as well as directions for future research.Managerial SummaryThis study suggests that companies operating across different international environments through their subsidiary operations will be exposed to distinct demands that vary according to the type of environmental complexity. Our results reveal that companies tend to appoint top managers with specialist backgrounds when their focus is on economically sophisticated environments, whereas top managers with generalist backgrounds tend to be preferred in institutionally ambiguous environments. Our findings enhance our understanding of the demand for executive generalists and specialists in the international business context by showing that top managers' backgrounds are matched with the prevailing type of complexity deriving from the international operations of the firm, thus, questioning the widely held notion that executive generalists are generally preferred over specialists. Our study has important implications for the composition of top management teams and the shaping of executive career paths at multinational firms.

Shine Bright Like a Diamond: When Signaling Creates Glass Cliffs for Female Executives

There is mixed support for the glass cliff hypothesis that firms will more likely appoint female candidates into top management positions when in crisis. We trace the inconsistent findings back to an underdeveloped theoretical link and deficient identification strategies. Using signaling theory, we suggest that crisis firms appoint female top managers to signal change to the market and argue that the effect is context-dependent. In a field study of 26,156 executive appointments in U.S. firms between 2000 and 2016, we exploit a regression discontinuity to test for the causal impact of firm crisis status on the likelihood of female top management appointments and for moderators of the effect. We find that crisis status leads to a significant increase in female top management appointments and that crisis (vs. noncrisis) firms are more likely to frame female appointments as change-related in press releases. Importantly, the presence of the glass cliff effect hinges on attributes of the signaler (absence of another female executive), signal (appointment type), and receiver (investor attention). The findings robustly evidence the glass cliff and our theoretical extensions.

Management geographical proximity and stock price crash risk

PurposeThis study provides empirical support for the cultural economics model between executive team and firm performance and offers important implications for policy selection and appointment of managers in China.Design/methodology/approachFrom the perspective of relationship embeddedness, the authors explore the impact of management geographical proximity (GP) on stock price crash risk in China. Using archival data from China's unique dataset about birthplace culture, the authors find that management GP experiences a large increase in corporate stock price crash risk for the period 2009–2018.FindingsThe impact of management GP on stock price crash risk is more pronounced when the company is located in areas with weaker formal legal environment and stronger Confucian culture. Furthermore, the impact has a significant links with firm characteristics such as information transparency, over-investment and tax aggressiveness.Originality/valueFirst, the research extends the literature on the empirical determinants of stock price crash risk. These studies focus on formal institution, not on informal institution, such as relational culture. Second, the research provides evidence for economic consequences on relational governance from executive birthplace culture to explore the economic consequences of geographical relational governance but takes stock price crash risk to present executives' behavior strategies and market reaction via exploring asymmetrical variation of market stock price. Finally, the paper provides reference to corporate governance arrangement and executive appointment.

The Illusion of Inclusion: Examining Trickle-Down Effects of Board Gender Quota Regulation in India

Proponents of board gender quotas argue that such policies ought to generate trickle-down effects in the form of higher female executive appointments within organizations because of female directors’ motivation and ability to correct firm level gender imbalances. In this study, we argue and show that such normative arguments may not be reflective of social realities of historically male dominated corporate boards. Grounding our theoretical ideas in the attention based view, we argue that such policies increase appointments of female directors because of the mandated shift in firm level attention towards the issue. However, given the controversial nature of such policies and gender differences in status and power, such policies may have unintended consequences of negative trickle-down effects where firms reduce appointment of women in senior executive positions. Analysis on a sample of 185 largest, publicly listed firms in India during 2008-2017 find support for our theory.

Judicial attitudes under shifting jurisprudence: Evidence from Brazil’s new drug law of 2006

This paper attempts to quantify the response of different types of appellate judges to a major shift in criminal jurisprudence on drug offenses in Brazil, which, in 2010, revoked the prohibition of conversion of prison sentences in drug offenses. Appellate judges may react to criminal reform by changing their rates of judgements that are favorable to defendants and, depending on the judge type, responses run in different directions and with variable intensity. This study offers detailed estimates of such responses and interprets them in the light of the literature on the determinants of judicial decision-making, which resorts not only on legal factors but also on the ideology, personal attributes and strategic behavior of judges. According to the Brazilian constitution, 10% of the seats in appellate courts must be filled by formerly practicing lawyers and 10% by former prosecutors, both by executive appointment. The remaining 80% are reserved for career judges. In addition to these appointments, appellate panels also rely heavily on judges sitting by designation, who acted as rapporteurs, between 2009 and 2013, in as many as 14% of all criminal appeals in the state court of São Paulo, which is the subject of the analysis. A large dataset of criminal appeals related to drug offenses and the exogenous assignment of cases allow identifying the causal effects of career backgrounds on the response of appellate judges to the shift in drug jurisprudence. Estimates of the effect of judge types on appellate case outcomes, conditional on case characteristics and judging panel-specific effects, confirm that career judges are more likely to rule in favor of defendants, in line with the shift in jurisprudence. Former prosecutors and sitting judges seem to react against the shift, by increasing their rate of rulings against defendants. Former lawyers tend to exhibit mixed behavior, possibly resulting from a combination of liberal attitudes and strategic behavior, in deference to policy preferences of the executive branch.

Silent Killers! - Toxic Leaders?

To counter the continuing high rate of executive failures this paper suggests a more forensic approach be adopted in the appointment of executives. It advocates Corporate Boards together with top and senior management consider the use of psychometric profiling - combined with regular monitoring of an executive’s ‘behaviour-in-context’ following their appointment - to guard against the emergence of toxic leadership behaviours. Derived from executive coaching experiences, and research, this paper highlights differing examples of dysfunctional and toxic leadership. The term ‘Covid-Tox is introduced to describe the pervasive virus-like presence of dysfunctional, destructive, counter-productive and fraudulent behaviour in the workplace and suggests ways through which such behaviour may be countered. Findings Its main findings are that that an assessment of the leader’s performance should be based on their ‘behaviour-in-context’ and involve regular post-appointment monitoring as a defence against the emergence of toxic leadership.

Who gets ahead in authoritarian parliaments? The case of the Russian state duma

ABSTRACT Scholarly attention to authoritarian legislatures is steadily growing, and recent research suggests that there is substantial lawmaking activity and deliberation within these bodies. Does such activity matter for legislators themselves? Can it improve their career prospects? I examine the career paths of Russian national legislators, using a newly collected data set on biographies and parliamentary performance of politicians who served in the Russian State Duma in 2004–2016. I find that members who apply more effort in legislative work are more likely to keep their parliamentary seats, but legislative effort does not increase the probability of executive appointment. Rather, legislators appear to be recruited into executive offices on the basis of previous work experience or personal ties. Parliamentary service, however, may still help legislators get ahead by making them more visible to government leadership. My research highlights that legislatures may be used by authoritarian governments to improve the management of political careers.

Article Note

Strategic Management JournalEarly View ARTICLE NOTE Article Note This note refers to this article: Examining investor reactions to appointments of Black top management executives and CEOs David M. Gligor, Millorad Novicevic, Javad Feizabadi, Andrew Stapleton, Volume 42Issue 10Strategic Management Journal pages: 1939-1959 First Published online: June 10, 2021 First published: 19 May 2021 https://doi.org/10.1002/smj.3310Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat No abstract is available for this article. Early ViewOnline Version of Record before inclusion in an issue RelatedInformation