Session 467

Putting Pressure on the CEO

Track O

Date: Tuesday, September 23, 2014

 

Time: 08:00 – 09:15

Common Ground

Room: Estocolmo


Facilitator:

  • Gerry McNamara, Michigan State University

Title: Corporate Downsizing: The Impact of Earnings Pressure

Authors

  • Ann-Christine Schulz, Free University of Berlin

Abstract: While prior research has largely focused on economic and firm-specific factors as predictors for corporate downsizing, little is known about the role of the financial markets and its constituents on managers’ decisions to downsize. In this study we propose that managers facing earnings pressure – the pressure felt by management to meet or beat analysts’ earnings forecasts – will be more likely to undertake major corporate downsizing since downsizing can reduce a firm’s cost structure and improve operational efficiency. Using panel data on S&P 100 companies for the 1990-2000 period, we find that earnings pressure has a positive impact on the probability of corporate downsizing. Moreover, our results show that earnings pressure is positively related to the extent of corporate downsizing at an increasing rate.

Title: Exploring the CEO-TMT Interface: CEO Generalized Self-Efficacy and the Strategic Decision-Making Process

Authors

  • Viva Bartkus, University of Notre Dame
  • Michael Mannor, University of Notre Dame
  • Craig Crossland, University of Notre Dame

Abstract: This study investigates the impact of a CEO’s level of generalized self-efficacy (GSE) on the CEO-TMT interface, and therefore the characteristics of important strategic decision-making processes within a firm. Building on implicit leadership theory, we hypothesize and find evidence that high levels of CEO GSE will be associated with lower levels of debate within the CEO’s decision-making team, less reconciliation of TMT members’ divergent opinions, and faster strategic decisions overall. We also provide evidence that these lower levels of TMT member engagement are viewed positively by TMT members, as CEO GSE is significantly associated with lower TMT turnover intentions and higher organizational commitment. We test our hypotheses using self-report, team-report, and other direct-response data drawn from almost 100 leaders and 300 subordinates from major corporations.

Title: Firm-Specific Knowledge Assets and CEO Dismissal

Authors

  • Heli Wang, Singapore Management University
  • Guoli Chen, INSEAD
  • Shan Zhao, Grenoble Ecole de Management

Abstract: This study explores the effect of firm knowledge resource structure on CEO dismissal. We argue that a high degree of firm-specificity in a firm’s knowledge resources is associated with the firm’s greater commitment to its existing strategy and practices, such as key employment arrangements. To induce CEOs to invest in specialized human capital, firms with higher specificity in their knowledge structure need to provide job security to their leaders. Thus we would observe that an increase in firm knowledge specificity is associated with a lower likelihood of CEO dismissal. Furthermore, we predict that the level of firm diversification mitigates the negative effect of firm-specific knowledge on CEO dismissal, as CEOs are more removed from the deployment of knowledge resources with an increase in the level of diversification. We find empirical results consistent with these arguments.

Title: How Emotional Language Can Influence Investors and Analysts

Authors

  • Yuri Mishina, Imperial College London
  • Nikos Dimotakis, Georgia State University
  • Cynthia E Devers, Texas A&M University
  • Benjamin Alexander, Tulane University

Abstract: Prior research has demonstrated that the informational content of externally-directed corporate communications can influence subsequent performance. What remains unanswered is whether or not how that information is discussed (i.e., the linguistic style) can influence how observers evaluate the firm if the informational content is held constant. The purpose of the present study is to begin to explicate the relationship between differences in linguistic style, evaluations of the firm, subjective valuations of the firm, and the firm’s projected value. We seek to primarily contribute to the literature on strategic leadership and governance by explicating ways that leader communication shapes stakeholders’ perceptions of firms using a combination of laboratory and archival approaches.

Title: Networks, Resources, Expansion and Blame: Conference Call Impacts

Authors

  • Vivien Jancenelle, Cleveland State University
  • Susan Storrud-Barnes, Cleveland State University
  • Richard Reed, Cleveland State University

Abstract: In this proposal, we are concerned with the impact of conference call discussions on a firm’s immediate abnormal returns. We study the impact of four recurring conversation topics (strategic networks, assets and tangibility, firm expansion and attitude towards failure) on the firm’s abnormal returns for the conference call period. We analyzed a preliminary sample 132 conference calls with a word-analysis software (DICTION) and calculated each firm’s abnormal returns using the event-study methodology. Our findings suggested with statistical significance that references to strategic networks as well as blaming failures on external factors both influence a firm’s abnormal returns positively.

Title: The Role of Coopetition in the Commercialization of Innovation

Authors

  • Jinqiu Cai, Loughborough University
  • Anne Souchon, Loughborough University
  • Paul Hughes, De Montfort University

Abstract: Coopetition enables competing firms to expand markets, offer lower cost bases, and introduce new products while simultaneously allowing the cooperating firms to still compete. Drawing on the resource-based view and agency theory, this exploratory study examines whether and how coopetition strategy impacts on the commercialization of innovation. A qualitative approach is adopted by conducting 10 in-depth interviews with decision makers of UK firms. The data is analyzed using Miles and Huberman’s (1994) approach. Results reveal that coopetition brings new resources and capabilities to companies, which facilitate the commercialization of innovation. However, the relationship between coopetition and the development of new resources and capabilities is potentially affected by two factors: opportunistic behaviour and mistrust. Findings are discussed and avenues for future research presented.

All Sessions in Track O...

Sun: 08:00 – 09:15
Session 311: The Power of Power: The Role of Power and Politics in Strategy Processes
Session 386: Entrepreneurial Corporate Governance
Sun: 11:15 – 12:30
Session 476: The Dark Side of Strategic Leadership and Governance
Sun: 15:45 – 17:00
Session 435: What Happens After the CEO Has (Been) Gone?
Sun: 17:15 – 18:30
Session 611: Strategic Leadership and Governance IG Business Meeting
Mon: 08:00 – 09:15
Session 335: Internationalization and Strategic Decisions
Session 458: Those at the Top Matter!
Mon: 11:00 – 12:15
Session 336: CEO Roles, Frames, and Traits
Mon: 14:45 – 16:00
Session 331: CEO Compensation: What we Know, What we Need to Study
Mon: 16:30 – 17:45
Session 337: Power at the Top - The Influence of Directors
Session 411: Ownership and Governance
Tue: 08:00 – 09:15
Session 428: Managing External Dependencies
Session 467: Putting Pressure on the CEO
Tue: 11:00 – 12:15
Session 465: The Importance of Corporate Governance
Tue: 15:30 – 16:45
Session 429: Director Selection and Influence
Tue: 17:15 – 18:30
Session 431: Agents, Principals, and Owners
Session 432: Upper Echelons Revisited


Strategic Management Society

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