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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
(Score: 2) by gtomorrow on Tuesday April 07 2020, @08:01AM (7 children)
Oh, you mean like Brian Driscoll...or maybe Edward Lampert...or Dr. Gil Emelio...or maybe Lloyd Blankfein.
BTW, I personally don't know any CEOs (at least at that level)...you?
(Score: 2) by The Mighty Buzzard on Wednesday April 08 2020, @02:32PM (6 children)
I mean the ones you never hear about because they're quietly doing their job and making a tidy profit over a sustainable timeline for whatever company they work for. Making outrageous profits over a quarter or four and then crashing is not a job well done.
My rights don't end where your fear begins.
(Score: 2) by gtomorrow on Wednesday April 08 2020, @07:08PM (5 children)
Yeah, well, these days "CEO" is, right or wrong, synonymous with razing iconic decades-old industries and floating safely to the ground on the golden parachutes. You know, kinda like how "democracy", "freedom" and "terrorism" are defined differently these days.
Oh, I forgot to add Roger Smith to that list before. My apologies.
(Score: 2) by The Mighty Buzzard on Thursday April 09 2020, @01:45PM (4 children)
Only within a certain subset of the population. You know, the one whose positions are based almost entirely on demanding what they do not deserve.
My rights don't end where your fear begins.
(Score: 2) by gtomorrow on Thursday April 09 2020, @06:07PM (3 children)
Ah, then we agree...the likes of Roger Smith and the other aforementioned pillars of society.
Mr Buzz, you're too old to help move giant limestone blocks into pyramid position anymore...what will they have you do?
(Score: 2) by The Mighty Buzzard on Friday April 10 2020, @12:12AM (2 children)
I ain't nobody's slave, yo. My boss may be an asshole but he also tells me to go fishing way more often than to get to work. Now if I could just get him to quit wearing my underwear.
My rights don't end where your fear begins.
(Score: 2) by gtomorrow on Friday April 10 2020, @05:43AM (1 child)
...aaaaaaaand now we're sliding into other territory. I guess this is the effect of breathing the fumes a 3-day-old article! 😷😆
(Score: 2) by The Mighty Buzzard on Friday April 10 2020, @11:15AM
Nah, just a joke of the dumb variety about being self-employed. Perfectly normal for me.
My rights don't end where your fear begins.