Age, CEO succession, and risk taking

CEO successions are major corporate events with the potential to change corporate direction. We investigate risk-taking following CEO succession and whether age affects CEO succession. In 679 CEO successions occurring between 1992 and 2005 in 650 small, medium and large-cap North American firms, we find that, except when the predecessor CEO was forced to leave, successor CEOs tend to entrench the status quo in terms of age. Board age has implications for corporate risk taking, with older boards being associated with less firm risk taking

CEO Succession, Gender and Risk Taking

Purpose - The purpose of this paper is to examine, within a succession framework, the impact of the gender composition of boards of directors on the gender of the CEOs they appoint, and to assess the impact of newly appointed CEOs\u27 gender on risk taking by the firm. Design/methodology/approach - The authors estimate a two-stage least squares regression using data on 679 CEO successions in North American firms. Findings - The results show that successor CEOs are more likely to be female the greater the percentage of females on the board, regardless of other succession characteristics such as whether the new CEO is from inside or outside the firm. Furthermore, a change in CEO from male to female is associated with a decrease in several measures of firm risk taking. Research limitations/implications - The sample is restricted to relatively large, exchange-traded North American firms and may not generalize to other groups. Practical implications - The findings suggest that women aspiring to CEO positions and firms wishing to promote women should monitor board composition to ensure female representation. Other steps that the firm may take to promote women to this position (such as looking outside the firm) have an insignificant impact when board composition is taken into account. Originality/value - The findings are novel and inform CEO succession research by demonstrating which succession process characteristics work to increase females\u27 chances and which have no effect. Female CEOs are likely to provide leadership that reduces the risk profile of the firm

The Impact of Layoff Announcements on Shareholders

Il est de croyance populaire que les lienciements sont bénéfiques pour les investisseurs et que ce sont les employés qui subissent le fardeau des réductions corporatives. En fait, il y a peu de recherche sur le sujet, et celle qui existe vise surtout des firmes américaines. De plus, la recherche existante peut être biaisée par le fait qu'elle fait des moyennes de réactions aux réductions en temps de récession et en temps de prospérité. On sait très bien que les réactions peuvent varier entre ces deux périodes. Conformément à la recommandation de l'Academy of Management d'étudier le comportement des actionnaires tant à l'intérieur qu'à l'extérieur de l'organisation, la présente étude examine l'effet des licenciements sur les actionnaires. L'échantillon utilisé inclut 137 licenciements par 57 entreprises canadiennes pendant la période de récession allant de janvier 1989 à août 1992. Nous avons utilisé la technique étude-événement, grandement utilisée en finances, pour vérifier si le prix des actions des entreprises qui annonçaient des licenciements variaient positivement ou négativement.Les résultats indiquent que le prix des actions des entreprises qui annonçaient des licenciements décroissait autour de la date de l'annonce de ces licenciements, cette performance négative n'étant statistiquement valable que lorsque les annonces des licenciements initiaux de chaque firme sont examinées. Cette conclusion concourt avec la théorie du signalement qui veut que la bourse réagisse seulement aux annonces initiales. Les licenciements plus importants amènent des réactions négatives plus significatives sur le prix des actions (conformément aux conclusions de l'étude de Worrell et al. 1991). La performance financière antérieure des entreprises n'est pas un facteur significatif influençant l'effet des licenciements sur la performance du prix des actions.Cette conclusion infirme la croyance populaire que les actionnaires profitent des réductions corporatives impliquant des licenciements. Ajoutant ici les conclusions d'autres études à l'effet que les employés sont affectés négativement par les licenciements, la preuve indique que les gestionnaires doivent trouver des voies alternatives pour demeurer compétitifs vu que les licenciements ne bénéficient ni aux employés ni aux actionnaires.This study explores the reactions of shareholders to layoff announcements. We examine shareholders' reactions to 137 layoff announcements by 57 Canadian firms over the period January 1989 to August 1992. Shareholders are found to react negatively to announcements of a layoff in their company. Shareholders have a greater negative reaction to a company's first layoff than to subsequent layoff announcements. Moreover, shareholders respond more negatively to large-scale layoffs than to those involving small percentages of the workforce. The implications of thèse findings for human resource management are discussed

Bank acquisitions of investment dealers: Canadian evidence and implications for Glass-Steagall reform

This paper analyzes the 1987 change in Canadian legislation permitting commercial banks to engage in investment banking, and makes comparisons to the US, where similar regulatory change is under way. The study focuses on the impact of such regulatory change on issue costs for corporations raising seasoned common equity. The findings indicate that although regulatory reform per se has had no effect on issue costs, costs for issues handled by a bank-owned underwriter are lower than those handled by an independent underwriter. The lower cost may be indicative of the availability of economies of scope between underwriting and commercial banking.Glass-Steagall · investment banking · Gramm-Leach-Bliley · financial modernization · banking

Market Reaction to the Formation of Export Trading Companies by American Banks

The stock and bond market reactions to American banks′ announcements of their intentions to form Export Trading Companies are investigated. The results are robust to various return-generating model specifications and are consistent with the view that the markets do not believe that U.S. bank Export Trading Companies will be successful.© 1993 JIBS. Journal of International Business Studies (1993) 24, 372–381