SoylentNews is people
SoylentNews
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: 3, Insightful) by JoeMerchant on Tuesday April 07 2020, @12:44PM (1 child)
There's the old risk vs. reward problem here, big risks lead to big payoffs - or disaster. As CEO, when you a big risk and get a moderate payoff (say, betting the whole company on 19 in roulette (37:1 odds), but only getting a 10:1 payoff) you can still spin it as an astronomical win for the press. Do that two or three times in a row and people think you walk on water, when in reality you're just putting people's livlihoods at risk for bad return on the odds.
🌻🌻 [google.com]
(Score: 2) by The Mighty Buzzard on Wednesday April 08 2020, @02:39PM
Yup, the ones you really want to hire are the ones who've no interest in a microphone and can see where the market is going and what to do about it with halfway decent accuracy. Rockstars can make you a lot quickly but they can lose you everything as well.
My rights don't end where your fear begins.