Returns on initial public offerings of closed-end funds

Examination of 41 closed-end fund initial public offerings (IPOs)during the period from January 1986 to June 1987 reveals thatthe mean initial day's return is not significantly differentfrom zero in contrast to previous findings for nonfund IPOs.New funds also show significant negative after-market returnsunlike other new issues. Despite the disparity between our findingsand previous results, our results are consistent with existingmodels.     

Seven surprises for new CEOs

As a newly minted CEO, you may think you finally have the power to set strategy, the authority to make things happen, and full access to the finer points of your business. But if you expect the job to be as simple as that, you're in for an awakening. Even though you bear full responsibility for your company's well-being, you are a few steps removed from many of the factors that drive results. You have more power than anybody else in the corporation, but you need to use it with extreme caution. In their workshops for new CEOs, held at Harvard Business School in Boston, the authors have discovered that nothing--not even running a large business within the company--fully prepares a person to be the chief executive. The seven most common surprises are: You can't run the company. Giving orders is very costly. It is hard to know what is really going on. You are always sending a message. You are not the boss. Pleasing shareholders is not the goal. You are still only human. These surprises carry some important and subtle lessons. First, you must learn to manage organizational context rather than focus on daily operations. Second, you must recognize that your position does not confer the right to lead, nor does it guarantee the loyalty of the organization. Finally, you must remember that you are subject to a host of limitations, even though others might treat you as omnipotent. How well and how quickly you understand, accept, and confront the seven surprises will have a lot to do with your success or failure as a CEO.     

Leading from the boardroom

These days, boards are working overtime to comply with Sarbanes-Oxley and other governance requirements meant to protect shareholders from executive wrongdoing. But as directors have become more hands-on with compliance, they've become more hands-off with long-range planning. That exposes corporations and their shareholders to another--perhaps even greater--risk, say professors Lorsch, of Harvard Business School, and Clark, of Harvard Law School. Boards are giving the long term short shrift for a number of reasons. Despite much heavier workloads, directors haven't rethought their patterns of operating - their meetings, committees, and other interactions. Compliance has changed their relationship with executives, however, turning directors into micromanagers who closely probe executives' actions instead of providing high-level guidance. Meanwhile, the pressure to meet quarterly expectations intensifies. Directors need to do a better job of balancing compliance with forward thinking. Boardroom effectiveness hinges most on the quality of directors and their interactions, the authors' research shows. Directors must apply their wisdom broadly, handling compliance work more efficiently and staying out of the weeds on strategic issues. Using their power with management to evangelize for long-term planning, they must take the lead on discussions about financial infrastructure, talent development, and strategy. Reserving sacrosanct time for such discussions, as Philips Electronics' board does at annual retreats, is an effective practice: After one recent retreat, Philips decided to exit the semiconductor business, where it was losing ground. Individual directors also must not shy away from asking tough questions and acting as catalysts on critical issues, such as grooming a successor to the CEO. In short, directors must learn to lead from the boardroom.     

Advice and dissent: rating the corporate governance compact

The July-August 1991 HBR presented "A New Compact for Owners and Directors," a set of principles for reconciling differences between owners and managers. In "Advice and Dissent: Rating the Corporate Governance Compact," a panel of three experts evaluates the Compact--and takes issue with its fundamental recommendation. Clifton R. Wharton, Jr., chairman and CEO of TIAA-CREF, describes how his organization brings delinquent managers and directors to task. Harvard Business School professor Jay W. Lorsch explains why strengthening the role of outside directors will develop more effective corporate control. And Lord Hanson, chairman of Hanson PLC, reaffirms the importance of maintaining a unitary board of directors and maximizing shareholder value.     

Making behavioral science more useful

Universal theories do not always fit the situation in which they are used, and management practice is no exception. In fact, the difficulty in applying such behavioral science theories has been the interpretation that they are applicable to all situations. This author asks managers and academics alike to recognize that the easy way does not always work, that more theories should be developed to fit different situations, and that staffs should be educated in the theories and techniques that are available.     

哈佛商学院更换领导人

董事会的一个重要的职责是决定CEO的人选，为什么他们挑选的总是错误的领导人呢？挑选首席执行官是任何公司最重要也是最具风险的大事。然而很少有董事会理解这个过程，他们通常是躲在董事会紧闭的大门后面秘密商定。