Ann K. Buchholtz and Barbara A. Ribbens, “Role of chief executive officers in takeover resistance: Effects of CEO incentives and individual characteristics,” Academy of Management Journal, June, 1994, 37(3), pp. 554-579. 

A study examines the influence of chief executive officers' (CEO) incentives and individual characteristics on the likelihood that target firms will resist takeover attempts.  Results showed that the greater the level of CEO stock ownership, the lower the likelihood of takeover resistance; however, neither the existence nor the magnitude of a CEO's golden parachute payment affected takeover resistance.  There is evidence that CEO stock ownership plays an important role in the protection of target shareholders' interests.  Although CEO age had a curvilinear relationship with the likelihood of takeover resistance, CEO tenure was insignificant.     

Kae H. Chung, Ronald C. Rogers, Michael Lubatkin and James E. Owers, “Do Insiders Make Better CEOs than Outsiders?” Academy of Management Executive, November, 1987,  1(4), pp. 325-331.

New chief executive officers (CEO) are chosen for 10%-15% of all US corporations each year, and 80%-85% of these corporations select outsiders for these positions.  The arguments for hiring insiders stress their greater knowledge of the firm and their established social networks.  Outsiders, however, may be more likely to grasp problems quickly and take decisive action.  Some 99 executive changes were examined to determine the differential effects of insiders and outsiders on corporate performance and identify actual CEO hiring practices.  In most cases, the leadership change had no strong impact on long-term profitability, though the origin of the leader did have an impact on stock price.  Still, while stock prices went up when outsiders were hired by high-performing firms, long-term profitability was more related to pre-succession performance.  High-performing firms were more likely to hire outsiders.  To make CEO succession practices more effective, a firm can: 1.  open the search to insiders and outsiders, selecting the most qualified, and 2.  develop insiders to replace the CEO.   

Catherine M. Daily and Dan R.  Dalton, Dan R., “CEO and board chair roles held jointly or separately:  Much ado about nothing?” Academy of Management Executive, August, 1997,  11(3), pp. 11-20.

CEOs who jointly serve as board chairs have been the focus of considerable controversy of late.  Some shareholder groups prefer a non-executive director serving as board chair.  The central concern of reform activists is that joint service as CEO and board chair erodes the corporate system of checks and balances and compromises independence between directors and firm officers.  Not surprisingly, CEOs rarely share this concern.  More than 80% of large firm CEOs also serve as board chair.  They believe the joint leadership structure provides a unified focus and communicates strong leadership to the external community.  A paper focuses on the extent to which chairs who jointly serve as CEO are more, or less, independent than their separate counterparts.  The analysis leads to the conclusion that, while there may sometimes be compelling reasons for formally separating the CEO and board chair positions, to do so as a matter of policy for the purpose of institutionalizing independence between the board of directors and firm management is likely to be a misdirected effort.   

Dan R. Dalton, Catherine M.  Daily, Idalene F.  Kesner and  Robert N.  McDowell, “Executive severance agreements: Benefit or burglary?” Academy of Management Executive, November 1993,  7(4): 69-79.

While executive compensation in general has been subject to critical attention, executive severance agreements have the potential to be far more embarrassing for America at large, the specific corporation, and any executive involved.  For US firms, a typical CEO severance agreement provides the payment of 3 to 5 times the annual salary.  Such severance agreements triggered by executive terminations, corporate takeovers, and bankruptcy seem difficult to justify.  The issue is less the amount that is paid than the lack of relationship between CEO pay and corporate performance.  This area may be a fruitful one for boards of directors who are currently reviewing the compensation policies of their firms.  Separate comments are provided by Robert N.  McDowell, Robert H.  Meehan, Richard A.  Hansen, and Michael A. Guthman. 

Steward D.  Friedman and Harbir  Singh, “CEO Succession and Stockholder Reaction: The Influence of Organizational Context and Event Content,” Academy of Management Journal,  December, 1989, 32(4), pp. 718-744.

Examination is made of how presuccession organizational performance and organizational size influence stockholder reactions to succession events in large corporations around the time that the succession occurs.  Data were gathered from responses from the senior-ranking human resources officers in Fortune 500 firms because they were considered to be the best informed about issues of succession and related management practices and policies.  Of the 1,000 surveys mailed, 235 were returned.  Results support the idea that stockholder reactions to successions are heterogeneous.  Some of the theories predicting positive stockholder reactions to chief executive officer (CEO) succession are supported.  In the context of poor presuccession performance, it is found that positive reactions greet board-initiated successions.  When performance has been poor, successions are viewed as adaptive.  Successions that result from a CEO's death or disability tend to meet with negative reactions, regardless of performance.       

Jerayr  Haleblian and Sydney Finkelstein, “Top management team size, CEO dominance, and firm performance: The moderating roles of environmental turbulence and discretion,” Academy of Management Journal, August, 1993,  36(4), pp. 844-863. 

Adopting an information-processing perspective and drawing on work in social psychology, a study examined the effects of top management team size and chief executive officer (CEO) dominance on firm performance in different environments.  Data from 47 organizations revealed that large teams and teams with less dominant CEOs were more profitable in a turbulent environment (the computer industry) than in a stable environment (natural gas distribution).  In addition, the association between team size and CEO dominance, and firm performance, is significant in an environment that allows top managers high discretion in making strategic choices but is not significant in a low-discretion environment.  Thus, environmental turbulence and discretion appear to operate as complementary constructs.   

Michael H. Lubatkin, Kae H. Chung, Ronald C.  Rogers, James E. Owers, “Stockholder Reactions to CEO Changes in Large Corporations,” Academy of Management Journal, March, 1989,  32(1), pp. 47-68. 

The hypothesis that executive succession can influence the financial performance of large organizations is investigated by identifying 477 chief executive officer (CEO) successions during the period 1971-1985 from Forbes' annual June issues about executive compensation.  The performance context of firms at the time of the succession events is approximated by cumulating their excess returns over 200 trading days, starting 300 days before the first public announcement of a CEO change.  Results suggest that the influence of context on excess returns during the presuccession period is positive and significant, indicating that the better firms perform before changing CEOs, the more favorably predisposed investors are to a change.  In the case of outside appointments, origin seems to have positive and significant effects on investors' expectations for all the time frames, except the 51-day presuccession period.         

Harry S.  Jonas  III, Ronald E.  Fry, and Suresh  Srivastva, “The Office of the CEO: Understanding the Executive Experience,” Academy of Management Executive, August, 1990,  4(3), pp. 36-48.  

With organizations increasing in size and complexity, executives are spending more time in symbol management, where they formulate values, ideas, and ideals through continuous dialogue with others.  A study of chief executive officers (CEO) in Cleveland, Ohio, helps to show how executives use language to describe their roles and, in the process, create meaning for themselves and others.  Executives in the study conceived of their roles in the following principal agendas: 1.  creating a context for change, 2.  building commitment and ownership, and 3.  balancing stability and innovation.  A theoretical rationale is presented for conceiving of the executive role in this way by focusing on 3 "cornerstones" of the executive task that a leader must integrate or mold together in order to be successful.  The first, continuity, sustains the day-to-day momentum and level of energy in the workplace.  The 2nd, novelty, represents the forces that give new life or energy to the enterprise.  The 3rd force, transition, refers to the organization's capacity to actually change or move from one state toward a more desired state. 

Robert E.  Kaplan, Wilfred H.  Drath, Joan R.  Kofodimos, “High Hurdles: The Challenge of Executive Self-Development,” Academy of Management Executive, August, 1987,  1(3), pp. 195-205.

Interviews with 22 executives and 18 experts on executives revealed that self-development, defined as the conscious, deliberate effort to come to terms with one's limitations, is especially difficult for those positioned high in the organizational hierarchy.  Self-development at the executive level is hampered by 4 elements of the executive job: 1.  Executives' ability to use power reduces the amount of criticism received due to their heightened impact, their demeanor, their isolation, and their autonomy.  2.  Executives' tendency to use introspection to guide self-development is limited by the extraordinary demands on their time.  3.  Executives' willingness to accept criticism is limited by their need to seem especially competent.  4.  Executives' successful track records can make it difficult for them to change.  In spite of these factors, executives can seek self-development and learning through criticism. 

Clinton O.  Longenecker and Dennis A.  Gioia, “The Executive Appraisal Paradox,” Academy of Management Executive, May, 1992,  6(2), pp. 18-28.

An apparent paradox in performance appraisal is that the higher managers rise in an organization, the lower the likelihood that they will receive quality performance feedback.  In order to examine executive performance, in-depth, semistructured interviews were conducted with 84 executives from 11 major organizations in manufacturing and service industries.  The findings indicate that the executive appraisal paradox is rooted in several myths concerning executives and their work.  Myths include: 1.  Executives neither need nor want formal performance reviews.  2.  Top-level executives are too busy to conduct appraisals.  Top managers should articulate and enact the following practices: 1.  Conduct a structured, systematic executive appraisal process.  2.  Incorporate performance planning into the executive review and appraisal process.  3.  Make performance review and appraisal an ongoing process.  4.  Focus on processes as well as outcomes during the executive review.  5.  Be as specific and as thorough as possible in the executive appraisal. 

Danny  Miller, “Some organizational consequences of CEO succession,” Academy of Management Journal, June, 1993, 36(3), pp. 644-659.

A longitudinal study examined the impact that chief executive officer (CEO) succession had on changes in the structures and strategy-making processes of some large corporations.  Data sources included many books and annual reports, and hundreds of newspaper and magazine articles.  The firms were mostly US companies of medium or large size, and they came from a wide variety of mature industries.  The results indicated that succession events tended to be followed by a diffusion of authority and, in the context of poor performance, by increased organizational information processing.  New leadership was also associated with change, regardless of direction, in most of the dimensions of structure and process assessed.   

Jonathan D. Quick, Debra L.  Nelson and James Campbell  Quick, “Successful Executives: How Independent?” Academy of Management Executive, May, 1987, 1(2), pp. 139-145.  

Successful executives pursue success for themselves, their firms, and their followers based on a strong self-image and an ego ideal.  Their definition of success is embodied by the ego ideal, which is the standard toward which they strive continually.  Combined with efforts to achieve their ego ideal, this striving is undertaken with a combination of drive, ambition, talent, and the support of others.  Due to the success' demands and challenges, inevitably, the pursuit of success is stressful for executives.  Executives confront a double bind in that they experience stress, but they are expected to transcend its impact.  Through a leap of faith, executives may manage successfully the stresses they face.  This leap of faith includes extending themselves through a strong network of supporting relationships at work and is accomplished through careful personnel choice, delegation of authority and responsibility, and honest communication.  A shield for the executive against stress is provided by the important attachments to others at work.  Therefore, the truly successful executive who is supported by a host of relationships may be described more accurately as "self-reliant" than as independent.   

Nandini Rajagopalan and Deepak K. Datta, “CEO characteristics:  Does industry matter?” Academy of Management Journal, February, 1996, 39(1), pp. 197-215.

A study examined the relationships between a comprehensive set of industry conditions and CEO characteristics utilizing data from a broad range of US manufacturing industries.  Pooled cross-sectional time series analyses indicated that industry conditions played a limited role in explaining variations in CEO firm tenure, educational level, functional background, and functional heterogeneity.  Results of subgroup regression analyses indicated that although high performers appeared to align the studied CEO characteristics more closely to industry conditions than low performers, differences between the industry coefficients in the 2 groups are generally small.   

Belle Rose Ragins, Bickley Townsend, and Mary  Mattis, “Gender gap in the executive suite:  CEOs and Female executives report on breaking the glass ceiling,” Academy of Management Executive, February, 1998, 12(1), pp. 28-42. 

While businesses are struggling to hold on to their best and brightest women, the persistence of the glass ceiling makes this difficult.  Dismantling the glass ceiling requires an accurate understanding of the overt and subtle barriers to advancement faced by women, and the strategies used to overcome these barriers.  A large-scale, national survey of Fortune 1000 CEOs and the highest-ranking, most successful women in their companies identified key career strategies used by the women in their rise to the top, and the barriers to advancement they faced in their firms.  A startling finding of the study was the disparity in the perceptions of CEOs and the high-ranking women in their firms.  The Fortune 1000 CEOs had vastly different perceptions of the organizational and environmental barriers faced by their female employees, and in their companies' progress towards equality in the workplace. 

Ram Subramanian, “The strategic influence of newly hired executives,” Academy of Management Executive,  August, 1998, 12(3), pp. 82-83.

New research suggests that when an executive moves from firm A to firm B, the newly hired executive may actually help firm B get into new product markets.  The relationship between executive migration and new market entry for 67 semi-conductor firms over an 18-year period was studied, and a significant, postive relationship was found between executive migration and a firm's likelihood of entering a market in which the new executive's former firm competed. 

Edward J. Zajac and James D. Westphal, “Who shall succeed? How CEO/board preferences and power affect the choice of new CEOs,” Academy of Management Journal, February, 1995, 39(1), pp. 64-90. 

A study shows how social psychological and sociopolitical factors can create divergence in the preferences of an incumbent CEO and existing board regarding the desired characteristics of a new CEO, and how relative CEO/board power can predict whose preferences are realized.  Using extensive longitudinal data, the study found that more powerful boards are more likely to change CEO characteristics in the direction of their own demographic profile.  Outside successors are also typically demographically different from their CEO predecessors but demographically similar to the boards. 

Case Studies

Kevin J. Murphy and Jay Dial, “General Dynamics:  Compensation and Strategy (A),” HBS Case, 9-494-048, 1993.

William Anders became CEO of defense giant General Dynamics in 1991 as the Cold War was ending and as the industry became saddled with excess capacity. Observing that the company was underserving shareholders and required a massive change in its culture, Anders brought in a new management team and introduced a new compensation system that better aligned the interests of managers and shareholders. Particularly controversial was the Gain/Sharing system, which paid large cash bonuses for each $10 increase in the stock price. The plan was widely criticized for rewarding top executives for manipulating stock prices through public announcements of layoffs and divestitures. Still, by the end of 1991, the stock price had climbed 113%, representing a $1.2 billion increase in shareholder wealth during the year. Teching Purpose: This case can serve several purposes. First, it provides an introduction to executive compensation. Second, it highlights the importance of linking incentives and corporate strategy in the context of a declining industry. Finally, the case can motivate discussions of downsizing and unemployment and the merits of rewarding top executives for cutting excess capacity. 

Paul M. Healy and Jacob Cohen, “The Boeing Co.'s Accounting for Executive Stock Compensation,” HBS Case, 9-100-031, 2000.

Examines the increased use and changes in accounting for executive stock options in the United States. Students are asked to analyze the role and value of stock options and the responses of companies to changes in accounting for options proposed by the FASB. Teaching Purpose: To illustrate the role of executive stock options and the process of financial reporting standard setting.