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posted by martyb on Tuesday April 07 2020, @01:50AM   Printer-friendly
from the it-all-adds-up dept.

How much CEOs matter to firm performance:

"Do CEOs matter?" has been a perennial question in management discourse. But "the CEO effect" has been notoriously difficult to isolate -- a moving target caught in the slipstream of dynamic forces that shape firm performance.

So Morten Bennedsen, INSEAD Professor of Economics and the André and Rosalie Hoffmann Chaired Professor of Family Enterprise, along with colleagues Francisco Perez-Gonzalez (ITAM and NBER) and Daniel Wolfenzon (Columbia University and NBER) decided to find out how much CEOs matter by measuring the impact on firm performance when a CEO is absent, specifically, hospitalised.

They find, in a forthcoming paper, "Do CEOs Matter? Evidence from Hospitalization Events", soon to be published in the Journal of Finance, that the financial ramifications of CEO hospitalisation are significant.

Based on data of nearly 13,000 Danish SMEs between 1996 and 2012, Bennedsen and his co-authors find that five-to-seven day hospitalisations sent firm profitability tumbling by 7% in the year of illness. Longer hospital stays of 10 days or more wreaked even deeper damage, lowering operating return on assets (OROA) by a full percentage point.

Journal Reference
Morten Bennedsen, Francisco Pérez-Gonzalez, Daniel Wolfenzon. Do CEOs Matter? Evidence from Hospitalization Events, The Journal of Finance[$] (DOI: 10.1111/jofi.12897)

See also: Phys.org

[Source]: INSEAD research


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  • (Score: 2, Disagree) by The Mighty Buzzard on Tuesday April 07 2020, @03:02AM (3 children)

    You know the difference between a company run by competent management and badass management? Amiga vs. Microsoft. Yeah, the difference matters if you want to be something other than an also-ran.

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  • (Score: 5, Touché) by Runaway1956 on Tuesday April 07 2020, @04:23AM (2 children)

    by Runaway1956 (2926) Subscriber Badge on Tuesday April 07 2020, @04:23AM (#979887) Journal

    So, uhhhh, parasitic practices distinguish badass management? Rent seekers and the like demonstrate badassery?

    • (Score: 4, Informative) by krishnoid on Tuesday April 07 2020, @05:38AM

      by krishnoid (1156) on Tuesday April 07 2020, @05:38AM (#979901)

      When it comes to extracting money out of customers, government, ecosystem, etc. for the financial benefit of shareholders of a corporation ... yeah? Let them start actually sentencing some actors to the corporate death penalty because they've found to be not working in the public interest, then that might start changing the story.

    • (Score: 2) by The Mighty Buzzard on Wednesday April 08 2020, @02:42PM

      by The Mighty Buzzard (18) Subscriber Badge <themightybuzzard@proton.me> on Wednesday April 08 2020, @02:42PM (#980265) Homepage Journal

      No, I mean employing lots of people vs. employing none.

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      My rights don't end where your fear begins.