Current CEO Research Articles

BASF, Solenis to combine water, paper chemicals

BASF and Solenis are creating a new water and paper chemical company by combining BASF’s business in the area with Solenis. The combination would have had about $2.9 billion in sales last year and 5,000 employees involved with products used in water treatment and paper manufacturing such as dyes, optical brighteners, polyacrylamide, and alkyl ketene dimer. BASF, which has been closing or divesting paper chemical facilities in an effort to boost profitability, is contributing businesses with close to $1 billion in annual sales and around 1,300 employees. Solenis is the former Ashland water chemical business. It was acquired in 2014 for $1.8 billion by Clayton, Dubilier & Rice, a private equity firm. The combined business will be owned 49% by BASF and 51% by CD&R. It will be called Solenis and headed by John E. Panichella, the current CEO of Solenis.

Green Leaf Grocery - Executive Compensation Case Study

The primary purpose of this teaching case is to aid students in understanding how executive compensation plans are utilized to achieve organizational goals and to then construct their own executive compensation plan for the CEO of Greenleaf Grocery, a fictional retail business based on an actual company.
 Students have the opportunity to create a comprehensive executive compensation plan using salary, bonuses, stock options, benefits, and other compensation tools. Additionally, the case provides the opportunity to discuss the use of both short-term and long-term incentive compensation. The company in this case is poised to undertake an initial public offering of stock and retaining the current CEO is viewed as critical for this next phase. 
 The case affords the class the opportunity to explore ethical issues in executive compensation as well as other aspects of the organization’s overall compensation structure.

Leadership in Kansas Agriculture: Examining Organization CEOs’ Styles and Skills

This project’s primary purpose was to identify and describe the leadership styles and skills emphases of current Kansas agricultural organization chief executive officers. Twenty-three current CEOs participated and were described in terms of their leadership styles, leadership-skills emphases, and demographics. Overall, they appeared to be rather “middle of the road” on each of the Multifactor Leadership Questionnaire’s nine leadership scales. Leadership styles were not significantly affected by demographics, with the exception of formal leadership training affecting transactional leadership and education level, organizational category, and staff size affecting passive-avoidant leadership. Participants generally rated the 50 leadership skills as important. Leadership styles did not significantly affect the skill emphases. In evaluating CEO candidates, an agricultural organization should design its process to gauge leadership styles and skills separately because, according to this project, they do not predict each other. Once a new CEO is hired, a formal leadership-training program should emphasize the transformational style over the transactional and, more so, passive-avoidant while still maintaining an appropriate balance between transformational and transactional.

Entrepreneurship in Bosnia and Herzegovina: focus on gender

PurposeThe purpose of this paper was to investigate gender differences in entrepreneurship development.Design/methodology/approachA quantitative study consisted of an on-line questionnaire administered to a random sample of 206 owner-manager CEOs across Bosnia and Herzegovina. Various statistical tools were used in the analysis.FindingsEmpirical results revealed significant differences in entrepreneurial performance between women and men. It was found that gender significantly affects entrepreneurial activities in firms with regards to innovativeness, proactiveness and risk-taking. Overall, female respondents scored better in entrepreneurial dimensions than did males.Practical implicationsThe state should support female entrepreneurship in the long term; aspirations exist, and this study’s results reveal this potential. Furthermore, it is recommended that women take a part in entrepreneurship development – a key to economic development. Also, it is suggested that education in entrepreneurship should be at a higher level than is currently the case.Originality/valueThis paper is the first empirical study that examines gender issues in entrepreneurship in Bosnia and Herzegovina. The study draws practical implications for current business owners, CEOs and potential entrepreneurs of either gender. This research removes stereotypes about female aspirations, competencies and skills in creating new start-ups and ventures, which in the long term will contribute to the economic development.

Does Independent Directors’ CEO Experience Matter?*

We find the confluence of CEO-same industry experience makes independent directors particularly helpful in enhancing value-added growth and we identify a channel: guidance toward higher value-added RD (2) they create more shareholder value as CEO; and (3) they are current CEOs. In addition, IDICEs contribute to value-added growth most when firm environments and characteristics are conducive for active board-management interaction; namely, when product markets are more competitive and dynamic, when outsiders can more easily acquire firm-specific information, and when firms are younger and smaller. Consistent with our inferences on how IDICEs contribute to value-added growth, firms growing faster, less successfully innovating, and/or under strong governance tend to be matched with IDICEs.

Net Loss? Agrochemicals and Insecticide Resistance in the Fight against Malaria.

Net Loss? Agrochemicals and Insecticide Resistance in the Fight against Malaria.

In Search of Board Independence: Former Employees, Shades of Gray and Director Classifications Revisited

In this paper, we show that a true measure of board independence requires a careful disentangling of both the functioning role of gray directors and the firm’s decision on whether to classify former employees as independent or gray. By reclassifying gray directors, we find that the likelihood of fraud significantly increases when a firm has former employees serving on its board of directors. These effects are particularly strong when these former employee directors have previously served with the current CEO, or when they assume important monitoring responsibilities by serving on the auditing and compensation committees. By contrast, we find that other “outside” gray directors are less associated with fraud. In this regard, we demonstrate that gray directors are not a monolithic group, and that there are important “shades of gray.” Given this perspective, we construct a novel measure of a board’s functioning independence. In a broad series of empirical tests, we demonstrate that while there is no significant link between the traditional measure of independence and corporate fraud, there is a strong link between our measure of functional independence and the likelihood of fraud. We also demonstrate that fraud is more likely to occur when a firm uses its discretion to classify a former employee as an independent director. We argue that this is a relevant indicator of the firm’s relative conservatism, which is shown to be negatively correlated with the likelihood of fraud.

Bridging The DivideLion Of The Senate: When Ted Kennedy Rallied The Democrats In A GOP Congress By Littlefield Nick Nexon David New York (NY) : Simon and Schuster , 2015 528 pp., $35.00

Bridging The DivideLion Of The Senate: When Ted Kennedy Rallied The Democrats In A GOP Congress By Littlefield Nick Nexon David New York (NY) : Simon and Schuster , 2015 528 pp., $35.00

Successor CEO Functional And Educational Backgrounds: Influence Of Predecessor Characteristics And Performance Antecedents

This study seeks to examine if boards consider CEO educational and functional background when choosing a new CEO. It also examines which factors determine whether the board of directors will seek an incoming CEO with a different educational and/or functional background from that of the current CEO. Using a sample of 832 successions between 1992 and 2009, we found that the outgoing CEO characteristics and the firm characteristics influence the selection of the incoming CEO functional backgrounds. We found an increase in the likelihood of firms hiring incoming CEOs with the same functional backgrounds as the outgoing CEOs. Incoming CEOs with functional backgrounds in engineering/manufacturing are more likely to be hired by research-oriented firms.Incoming CEOs with functional backgrounds in accounting/finance are more likely to be hired by poorly performing firms. We also find that firms are more likely to change the functional background of the successor relative to the predecessor when there has been poor prior performance and the firm has higher institutional investor ownership.

Investor Reactions to Company Disclosure of High CEO Pay and High CEO-to-Employee Pay Ratio: An Experimental Investigation

ABSTRACT There is significant debate about the usefulness of disclosing the CEO-to-median employee pay ratio, as required under Section 953(b) of the Dodd-Frank Act in the United States. Using an experiment, we find that disclosing higher-than-industry CEO pay (versus comparable-to-industry CEO pay) marginally decreases perceived CEO pay fairness and perceived workplace climate, which is counteracted by a significant positive effect on perceived CEO attraction/retention ability, although there are no significant indirect effects through these perceptions on perceived investment potential. However, incrementally disclosing a higher-than-industry pay ratio (versus disclosing only higher-than-industry CEO pay) significantly decreases perceived CEO pay fairness and marginally deceases perceived workplace climate, and we find a significant indirect negative effect on perceived investment potential through perceived CEO pay fairness. If companies are concerned about negative public perceptions, then our results suggest that pay ratio disclosures may be better able than current CEO pay disclosures at shaming companies into restraining CEO pay. Data Availability: Contact the authors.

That special someone: When the board views its chair as a resource

Research summary: Many boards view their chairs as valuable resources. We predict that whether a board adopts such a view depends on the board chair's human and social capital. Data from S&P 500 firms suggest that while a board chair's human capital increases the probability that the board views him or her as a resource, social capital has no overall effect. In a post-hoc investigation, however, we find the board chair's independence to be an important boundary condition for the effect of social capital. With this exploratory research, we aim to spur research devoted specifically to board chairs. Such research will become increasingly important over time as firms continue to separate their CEO and board chair positions. Managerial summary: The purpose of this research was to determine the factors that lead a board of directors to view its chair as a valuable resource. We expected that board chairs with high human and social capital would be more likely to be viewed as a resource by their colleagues. Surprisingly, only human capital exhibited such an effect overall. Social capital increases the likelihood a chair is viewed as a resource when the chair is independent, but actually decreases the likelihood a chair is viewed as a resource when the chair is either the current or former CEO. These results suggest that boards generally value human capital in their chairs, but view social capital through a somewhat more complex lens. We explore the possible implications of these findings in the article. Copyright © 2015 John Wiley & Sons, Ltd.

Perspectives on the Melbourne International Women's Jazz Festival

This paper examines the significance of the Melbourne Women’s International Jazz Festival as a long-established annual event highlighting the contributions of women jazz musicians to Australian music culture. Nine women were interviewed about their experiences with MWIJF as performers, composers and/or organizers, as were the founder of the festival and current CEO. The importance of the festival to the participating artists’ creative and career development and its role in supporting emerging women artists are revealed through their comments. The festival is contextualized with reference to the historical experiences of women jazz musicians both in Australia and internationally.

Caffé Bene Disrupts the Stagnating Korean Coffee Shop Market

Caffé Bene was founded in 2007, during which the coffee shop market in Korea had been experiencing rapid growth. Caffé Bene had to compete with existing brands, including Starbucks, The Coffee Bean and Tea Leaf, and other coffee shop chains native to Korea. Sun-Kwon Kim, the founder and current CEO of Caffé Bene, tried to differentiate his brand on the basis of a new concept of European ambience mixed with Korean culture, new and localized menus, and celebrity endorsements; all of which were unheard of in the retail coffee industry at that time. This novel approach allowed Caffé Bene to gain great popularity in a short period of time. Despite its extraordinary success, however, Caffé Bene faced numerous challenges, including managerial issues caused by excessive expansion and rapid growth, dilution of differentiation as a result of new entrants that mimicked Caffé Bene's unique strategies, and an overall sluggish growth rate in the coffee shop market. In this case, the challenges that Caffé Bene faced and the strategies it employed to successfully deal with them are discussed.

Successor CEO Functional and Educational Background

This study seeks to examine if boards consider CEO educational and functional background when choosing a new CEO. It also examines which factors determine whether the board of directors will seek an incoming CEO with a different educational and/or functional background from that of the current CEO. Using a sample of 832 successions between 1992 and 2009, we found that the outgoing CEO and the firm characteristics influence the selection of the successors’ functional backgrounds. Firms are more likely to hire new CEOs with functional backgrounds similar to the outgoing CEO. Research-oriented firms hire CEOs with the functional background that would permit them to understand the firm’s research processes. Firms with poor prior operating performance tend to hire successors with a financial/accounting background. We also find that firms are more likely to change the functional background of the successor relative to the predecessor when there has been poor prior performance and the firm has higher institutional investor ownership. This study suggests new avenues of research for the direction of causality between CEO personality and background on one hand and corporate growth and managerial decision making on the other hand. It offers insights into how boards can use firm characteristics and outgoing CEO characteristics to motivate the incoming CEO characteristics.

Experience Matters? The Impact of Prior CEO Experience on Firm Performance

We sample CEOs of the 2005?S&P 500 corporations to look at the relationship between experience in the CEO position of a different firm and the post-succession financial performance of the firm that they currently lead. We find that experience in the CEO position is negatively related to firm performance. CEOs who directly move to their current CEO position from the previous one and those with job-specific experience in the same or related industry or at the helm of a previous company similar in size to the current one are associated with significantly lower post-succession performance than those without prior CEO experience. The results contribute to the literatures on CEO succession, the performance effect of job-specific experience, and the transferability of human capital.

Adolescents and their experience of victimization at home and at school

The newly invented ‘Hyperloop’ derived from the ideas of Elon Musk, the current CEO of Tesla Electric vehicle.BR This idea attracted a lot of attention from around the world, including from Obama, the previous President of the U.S., and even various nations of Europe. There has been high hopes of creating Hyperloop-related products, which require high technology, and many companies have been investing in the idea. So far, they have completed a detailed test run. These technical skills are being exported to Southeast Asia and is dominating the ‘Hyperloop’ market. Korail has been developed with continuous advances ever since its launching, and it arose as a national railroad powerhouse that is now recognized everywhere. We expect it will make a good match with ‘Hyperloop’. Therefore, we will introduce the tube vehicle development and its status within and outside of Korea and which direction this study will lead to in the future.

Governance in the Executive Suite and Board Independence

The overall independence of a firm’s governance system depends not only on the independence of its board of directors but also on CEO influence over the other top executives. We find that board independence and independence from CEO influence in the executive suite are inversely related. Difference-in-difference estimates using a regulatory shock reveal that strengthening board independence weakens executive suite independence, which is proxied by (the inverse of) the fraction of top executives appointed by a current CEO. We also find that the greater the increase in the fraction of the current CEO’s appointees in the executive suite, the lesser the improvement in monitoring CEO compensation and the lower the shareholder value enhancement in the aftermath of the regulation. These findings imply that one cannot infer overall independence based on board independence alone and that strengthening a specific governance mechanism by regulation can have undesirable spillover effects to a seemingly unrelated governing body.

Can Bank Boards Prevent Misconduct?

We study whether two key functions of bank boards, monitoring and advising, are effective in preventing misconduct in banks. We use regulatory enforcement actions issued against US banks to identify banks that engage in misconduct. We rely on metrics related to the social connections of directors to measure board monitoring and advising. Board monitoring is defined as the fraction of directors who are appointed before the current CEO takes office. Board advising is calculated based on the total connections that board directors establish with directors of other boards. We find that both board monitoring and advising are effective in preventing misconduct by banks. Further analysis reveals that while better monitoring by boards prevents all categories of misconduct, better advising prevents misconduct of a technical nature. Our results are robust to a number of CEO-, board-, firm-specific controls as well as a two-stage instrumental variables (IV) analysis that circumvents endogeneity concern. Finally, we find a positive relation between the announcement returns and our board measures, implying that effective boards are associated with less severe misconduct. We study three mechanisms that explain the results. First, we find that effective boards are associated with safer bank fundamentals. Second, effective boards increase the likelihood of misconduct detection. Third, effective board monitoring is associated with higher penalties imposed on the CEO if misconduct is revealed. Our paper offers novel insights on how to structure boards to prevent bank misconduct. First, the results of our study imply that the advisory function of boards deserves more attention as part of the governance process. Second, we show that conventional board measures such as board independence and financial expertise have no measurable effect bank misconduct being committed or detected. By contrast, the board metrics related to monitoring and advising we study in this paper are important predictors of misconduct. Thus, governance metrics revolving around CEO connections warrant more attention from regulators, investors and governance activists.

Forensic Diagnosis and Transformation of an Organizational Culture

Since the relatively recent unethical behaviour of some employees in various organizations has been publicized, organizational scientists and management practitioners have correctly attributed this behaviour to an organization's culture. However, based on our analysis of the case we describe in this manuscript and the existing ethics literature, we argue that there is a need to begin investigating factors here-to-fore that have been omitted in past research on why people behave unethically. We apply Schein's (2004) framework of organizational culture (i.e. artefacts, espoused beliefs and values, and underlying assumptions) and the stakeholder theory of management (i.e. the satisfaction of legal, economic, moral, and philanthropic responsibilities) in describing the evolution and transformation of the HealthSouth (HS) Corporation (a Birmingham, AL-based healthcare company) organizational culture from its founding in 1984 to 2011. In 2003, a former chief financial officer of HS turned whistleblower and revealed that the company had been fraudulently reporting earnings since 1996. Once the investigation began, 16 executives were found to be guilty of a $2.7 billion fraud. From published documents available in the public domain and from information provided by the current CEO, we describe the details of the fraud, the turnaround of HS, and the transformation of the finance/accounting organizational culture. Because of the cultural transformation, the company is now a profitable and reputable company.

Building and transforming an emerging market global enterprise: Lessons from the Infosys journey

The story of Infosys’ growth and transformation from a $250 start-up to its current market valuation of approximately $26 billion provides one of the most pertinent lessons in leveraging India's strengths and managing the challenges faced by an emerging market global enterprise based in India. In this article, we present a wide-ranging interview with Infosys’ current CEO, Mr. S.D. Shibulal, as he explains what he considers to be the core strengths of the company that made it successful in the past, lays out his vision for the company's future, and discusses in detail how he sees the company's transformation taking place over the coming years. The conversation uncovers several interesting themes and lessons for multinational enterprises in emerging as well as developed economies, including the relevance of being born global, values-based governance, the necessity of creating hybrid business models that infuse the ‘India way’ with local cultures and practices in global markets, leveraging strategic partnerships via co-creation and co-evolution, and the delicate balance between ‘preservation-creation-destruction.’