Knowledge@HEC - Special Issue - Compilation of Research Articles - (Page 7)
METHODOLOGY
The researchers linked various data sources to demonstrate empirically that there is a correlation between the make-up of a firm's
executive committee and its corporate performance (profitability, stock returns, and long-term success of acquisitions): the ExecuComp panel
of the salaries of the five highest-paid executives in the largest American corporations was used to obtain the ratio of executives hired after the
current CEO was appointed; Compustat for accounting data relating to each of ExecuComp's 195,890 observations; data from the Investor
Responsibility Research Center for measuring external corporate governance; SDC Platinum for data regarding acquisitions; and the Center for
Research in Security Prices for the relevant stock returns.
Leaders make
better progress
in some cases if
they are obliged to make
an effort to convince
troops who are apparently
skeptical.
P RACTICAL
A PPLICATIONS
One concrete conclusion for companies that can be drawn from the article
is that ensuring members of executive committees remain in place when
there is a change in CEO can function as a safeguard. "This can be a way of
calming relations and showing that the firm is operating well and in a
rational and upward manner," says David Thesmar. But he also remains
pragmatic: "Everyone knows that a company is not a democracy. The CEO
has a vision and cannot be faced constantly with oppositions and having to
convince executive committees about his strategies everyday. A priori, a
non-monolithic organization performs better, but this depends a great deal
on the larger contexts in which the company is situated."
MORE INDEPENDENTLY-MINDED TOP EXECUTIVES
IMPROVE PERFORMANCE
So the question remains: who can properly oversee the decisions of a CEO in a company? To respond to this question,
David Thesmar set out to analyze executive committees to
measure the independence of their members in relation to
the CEO. The criterion used to measure their independence
consisted in studying which members of the executive committee were in place before the CEO had taken office. "Company
heads can have subordinates who would not necessarily
chal-lenge him, because for a company to function, they have
to adhere to his strategy," explains Thesmar. "Either individuals
are very independently-minded and the leader listens to them
and adapts his strategy, or they are subservient to the CEO
because of their position in the company and simply follow
him, no matter how risky his actions are." This work is based
on an earlier paper that shows that differences in points of
view in a chain of command can contribute to improving the
way an organization functions. These differences oblige leaders to justify or even modify their decisions to ensure that
they are supported by their troops. In one sense, leaders may
at times make better decisions if they are obliged to convince
troops who are a priori skeptical. "The method for measuring
the independence of execu-tive committees that results from
this study is a strong predictor of corporate performance,"
concludes David Thesmar. "There are multiple possible exp-
lanations for why this. But what is certain is that this is the
first time that it has been possible to measure company structure and its internal governance in a way that provides a
relatively robust and strong explanation for differences in
performance." ■
*"Optimal Dissent in Organizations", Review of Eco-nomic
Studies, April 2009, Vol. 76, No. 2, pp. 761-794 (in collaboration
with A. Landier and D. Sraer).
Based on an interview with David Thesmar and the article
"Bottom-Up Corporate Governance" co-written by D. Sraer, A.
Landier, J. Sauvagnat, which won Thes-mar the European
Finance Association prize for the best paper published in
Review of Finance (January 2013, Vol. 17, No. 1, pp. 161201).
Knowledge HEC
4
Table of Contents for the Digital Edition of Knowledge@HEC - Special Issue - Compilation of Research Articles
Cover
Partner companies
Table of Content
公司治理 (David Thesmar)
Corporate governance
欧洲的可再生能源 (Andrea Masini)
Renewable energies in Europe
决策 (Mohammed Abdellaoui)
Why do decision makers underestimate rare events?
建立信任 (Michel Lander)
Building trust for successful mergers and acquisitions
产品线质量的高低端延伸 (Timothy Heath)
Extending product lines up and down in quality
制度变革 (Carlos Ramirez)
Institutional change
奢侈品市场 (Anne Michaut-Denizeau)
The luxury market
创业 (Anisa Shyti)
Entrepreneurship
Knowledge@HEC - Special Issue - Compilation of Research Articles
http://www.nxtbook.fr/newpress/hec/knowledge-at-hec_Compilation_of_Research_Articles-Chinese-2016
http://www.nxtbook.fr/newpress/hec/knowledge-at-hec_Special_Issue_02-Compilation_of_Research_Articles-Chinese
https://www.nxtbook.com/newpress/hec/knowledge-at-hec_Special_Issue-Compilation_of_Research_Articles-Chinese
https://www.nxtbook.com/newpress/hec/knowledge-at-hec_Special_Issue-Compilation_of_Research_Articles
https://www.nxtbook.com/newpress/hec/research-at-hec_Special_Issue-Compilacao_de_Pesquisas
https://www.nxtbookmedia.com