CEO and Outside Director Equity Compensation: Substitutes or Complements for Management Earnings Forecasts?

Abstract

This study examines how the equity compensation of chief executive officers (CEO) and that of outside directors affect management earnings forecasts (MFs) and the relationship between these two positions in terms of compensation. Our evidence reveals that CEO (director) equity compensation is positively associated with MF likelihood, frequency, and accuracy when director (CEO) equity compensation is not high. However, an increase in director (CEO) equity compensation is not effective in improving disclosure quality when the level of CEO (director) equity compensation is already high. These results suggest that the two incentive mechanisms act as substitutes when both are intensively used in the context of MF disclosure.     

Components of CEO Transformational Leadership and Corporate Social Responsibility*

abstract We use transformational leadership theory to explore the role of CEOs in determining the extent to which their firms engage in corporate social responsibility (CSR). We test this theory using data from 56 US and Canadian firms. CEO intellectual stimulation (but not CEO charismatic leadership) is found to be significantly associated with the propensity of the firm to engage in ‘strategic’ CSR, or those CSR activities that are most likely to be related to the firm's corporate and business‐level strategies. Thus, studies that ignore the role of leadership in CSR may yield imprecise conclusions regarding the antecedents and consequences of these activities. We also critique transformational leadership theory, in terms of its overemphasis on charismatic forms of leadership. This leads to a reconceptualization of transformational leadership, which emphasizes the intellectual stimulation component in the context of CSR.     

Firm risk and the power of the Chairman and CEO in a civil law country: evidence from Spain

Many authors have examined the effect of various control mechanisms on firm value, but have devoted little attention to the effect of these mechanisms on firm risk. This paper studies the effect of different variables related to the power of the chairman and chief executive officer (CEO) on firm risk in Spain. Decisions taken by both the chairman and the CEO are very important in order to attain the shareholders' objectives. Thus, decisions relative to both posts can be considered very relevant from the human resources point of view. There is little previous empirical evidence on this topic, and what there is comes from the US. Most results are consistent with what we call a ‘power perspective’. That is, we observe a positive relation between firm risk and combining in the same person the positions of chairman of the board and CEO. We also find a positive relation between firm risk and the status of both leaders as founding partners, and a negative relation between firm risk and board size.     

Foundation funding of grassroots organisations

According to grassroots scholar David Horton Smith, there are 7.5 million grassroots associations in the USA (compared to two million paid staff nonprofits). He states, ‘Associational participation is a major engine of democratic participation.’ J. Craig Jenkins and Abigail Halcli found that foundations commit only 0.2 per cent of all their grants for indigenous social movement organisations. The Foundation Center collects no statistics concerning foundation funding of grassroots organisations. Why do grassroots organisations not receive more foundation money? What could foundations do differently to get more money into their hands? And what could grassroots organisations do differently to obtain more foundation money? These are the central questions addressed in this study. To obtain answers to these questions, 48 people were interviewed by telephone: 26 grassroots organisation leaders and 22 foundation executives. The findings in this study defy easy summary. Contrary to the author's expectations, there is often great harmony between grassroots leaders and foundation officials. Frequently, the interviewees, whether grassroots or foundation types, speak of or allude to ‘partnerships’. This is true even when most grassroots leaders blame foundations for the fact that they do not receive any or enough money. Another key finding is that foundation officials believe that different social class between themselves and grassroots organisations is crucial to the minimal funding of grassroots organisations. Yet almost no grassroots leaders mentioned this as a factor. Perhaps the most salient fact that comes through, is that the foundations that regularly fund grassroots organisations have great knowledge and sympathy for these organisations, and that other funders who might want to enter into such funding would be well advised to seek their counsel. By the same token, the grassroots organisations which have done well with foundation funding feel quite comfortable with the foundations, and those other grassroots leaders who might want to obtain foundation funding should seek out their successful brothers and sisters. The particular value of this qualitative study is the way in which it divulges the great diversity of interactions between grassroots and foundation leaders. Copyright © 2002 Henry Stewart Publications     

Community Leadership and the Construction of Political Legitimacy: Unpacking Bourdieu's ‘Political Capital’ in Post‐Apartheid Johannesburg

Apart from local monographs and normative texts on community participation, research on community leadership constitutes a blind spot in urban leadership, urban politics, social movements and urban studies. This article, based on case studies in post‐apartheid Johannesburg, contributes to theorizing community leadership, or informal local political leadership, by exploring Bourdieu's concepts of ‘political capital’ and ‘double dealings’. Considering community leaders as brokers between local residents and various institutions (in South Africa, the state and the party), we examine how leaders construct their political legitimacy, both towards ‘the bottom’ (building and maintaining their constituencies), and towards ‘the top’ (seeking and sustaining recognition from fractions of the party and the state). These legitimation processes are often in tension, pulling community leaders in contradictory directions, usefully understood under Bourdieu's concept of ‘double dealings’. Community leaders are required, more than formally elected political leaders, to constantly reassert their legitimacy in multiple local public arenas due to the informal nature of their mandate and the high level of political competition between them — with destructive consequences for local polity but also the potential for increased accountability to their followers. We finally reflect on the relevance of this theoretical framework, inspired by Bourdieu, beyond South African urban politics.     

Strategies for competitive advantage in nonprofit organisations

In the commercial sector, a range of strategies has been proposed for competitive advantage. Many of these strategies are inappropriate for nonprofit organisations. (The terms ‘nonprofit’, ‘not-for-profit’ and ‘charity’ are used interchangeably in this paper.) This paper proposes four generic strategies for competitive advantage in nonprofit organisations: externally driven, niche, differentiation and awareness. The niche strategy has two sub-strategies: the issue or emotional niche and the geographical niche. Differentiation has three sub-strategies; differentiation by audience, differentiation by product and differentiation by belief. These four strategies are not mutually exclusive and many nonprofit organisations move from one strategy to another. A development model for these transitions is proposed.     

The Global Leadership Life Inventory: development and psychometric properties of a 360-degree feedback instrument

The purpose of this paper is to describe the design of Global Leadership Life Inventory (GlobeInvent), a 360-degree leadership feedback instrument. This instrument is presently used in executive programmes to help identify the operational mode of individual executives. Proper use of this instrument enables the user to determinate those areas of leadership behaviour where improvement is needed.

Because most studies pay attention only to the surface manifestations of leadership, most leadership feedback instruments, in turn, are not concerned with the psychodynamic processes that underlie leaders' character and behaviour. To address this gap, the GlobeInvent is based on a clinical orientation to the study of leadership. This approach provides a more complete analysis of the ‘inner theatre’ of leaders?–?that is, what makes them tick?–?as well as measuring the dynamic, two-way relationship between leaders and followers.

The first step in designing the instrument was to pinpoint significant themes pertaining to exemplary leadership. To that end, semi-structured interviews with senior executives were held. The leadership dimensions that emerged from that process were then tested on an international sample of senior executives. Analysis of the data from the testing confirmed the existence of twelve robust dimensions with a high reliability and internal consistency.

Because the GlobeInvent is a 360-degree feedback instrument, this article addresses differences between ‘Self’ scores and scores given by others (‘Observers’), gender differences in scoring and the influence of nationality, management experience and age on test results. The implications of using such an instrument as a 360-degree feedback tool are reviewed, and suggestions for future research are offered.     

Constructive Leader Behaviors,Likelihood of Derailment,and the Cuboid Personality Framework: A Replication and Extension of Gough (1990)

Gough (1990b) applied the California Psychological Inventory's (CPI) “cuboid” framework to various leadership contexts, noting the potential for continued, future application of this model within the leadership domain. However, subsequent to this initial investigation (and one similarly oriented but differently executed project), no cuboid follow‐up has taken place. Applying the framework to a large sample of international managers, cuboid classifications were recorded across cultural regions, gender, race, age, organizational level, and industry. Associations with indices of leadership effectiveness and derailment were documented via averaged 360° ratings. Results generally support norm‐favoring individuals as exhibiting leadership advantage, although this effect differed slightly across the leadership dimension being assessed (although remaining relatively stable across hierarchical leadership position). Potential future applications of the cuboid model to the management and leadership domains are suggested primarily in the topical areas of cross‐cultural leadership (different occupancy rates were documented across regions of origin), leadership emergence (interpersonally oriented, norm‐favoring individuals predominantly occupied leadership positions), and leader development (low “satisfaction” and rule‐questioning leaders were generally rated as having lower effectiveness ratings and an increased likelihood of derailment).     

Picking the Measuring Stick: The Role of Leaders in Social Comparisons

Organizational members frequently evaluate how their abilities and standing compare with those of their colleagues. Although these comparisons can have a negative impact on organizations, little attention has been paid to the role of leaders in these processes. Drawing on interviews with individuals in leadership positions in business schools, we develop a framework to explain what triggers leaders’ attention to social comparisons among faculty and how they become involved in them. Central to this framework are leaders’ self‐schemas, which encompass their preferences about the criteria members should use in making comparisons. Leaders’ self‐schemas are activated by discrepancies between their own comparative judgements and those they perceive members to be making and impel them to act in ways consistent with their preferred bases of comparison. Our framework repositions social comparisons as a multi‐perspectival, political phenomenon in which leaders see themselves as playing a role in shaping members’ evaluations and workplace interactions.     

Forecasting unknown-unknowns by boosting the risk radar within the risk intelligent organisation

This theoretical perspective paper interprets (un)known-(un)known risk quadrants as being formed from both abstract and concrete risk knowledge. It shows that these quadrants are useful for categorising risk forecasting challenges against the levels of abstract and concrete risk knowledge that are typically available, as well as for measuring perceived levels of abstract and concrete risk knowledge available for forecasting in psychometric research. Drawing on cybersecurity risk examples, a case is made for refocusing risk management forecasting efforts towards changing unknown-unknowns into known-knowns. We propose that this be achieved by developing the ‘boosted risk radar’ as organisational practice, where suitably ‘risk intelligent’ managers gather ‘risk intelligence information’, such that the ‘risk intelligent organisation’ can purposefully co-develop both abstract and concrete risk forecasting knowledge. We also illustrate what this can entail in simple practical terms within organisations.     

Creating a multilayered representational ‘package’ for subcontracted workers: the case of cleaners at Ben‐Gurion University

Research into the organising of subcontracted workers tends to focus on how such campaigns contribute to union revitalisation, the shortcomings of non‐union organisations in comparison with classic unionism and opposition rather than complementarity between strategies. Analysing the organising of subcontracted cleaners at a university, this article shifts this focus, evaluating the campaign in terms of how it assisted the workers, regardless of whether it contributed to union renewal, and in terms of complementarity between new and traditional industrial relations actors. Drawing on the power resources approach, it asserts that collaboration across different ‘paths to representation’ can create a multilayered representational ‘package’ in which different organisations with different power resources take on different aspects of what was once a (single) union's role, covering each other's shortcomings in a kind of de facto representational ‘division of labour’.     

Bouncing up: The development of women leaders’ resilience

Although there are preliminary indications that resilience is a key factor for women on their way to top leadership positions, research on this topic is scarce. To narrow this research gap, we applied an exploratory interview study focusing on the development of women leaders’ resilience. We conducted 25 biographical interviews with women in top leadership positions in medium and large companies listed in Germany. Through a qualitative content analysis, we identified three critical phases for the development of women leaders’ resilience—early life, early career, and upper leadership—as well as phase-specific resilience factors—i.e., individual, situational, and behavioral factors. We integrated these findings in a process model that provides insights into the interlinkages of the different phases and factors and can serve as a starting point for future research.     

Employment equity policy frames in the literature: ‘good practice’ versus ‘bad idea’

Work organisations considering policies against racial or ethnic discrimination and for recognising diversity can find many different and often conflicting recommendations in the literature, in particular regarding the aim of proportional representation of different ethnic groups. To better understand this controversy, this paper rigorously examines three key theories from a frame-critical and business ethics perspective. It introduces a fundamental threefold conceptualisation of ‘employment equity policy’ (EEP) as a catch-all term for related concepts such as ‘affirmative action’, ‘equal opportunities policy’ and ‘diversity management’, distinguishing between three different organisational goals: equal treatment, equal results and individual recognition. The analysis suggests that different authors emphasise some ‘facts’ rather than others and strategically interpret the limited available empirical research to support their policy positions, mixing both classical and newer ethical reasoning. In the ‘good practice’ frame, human resource management practitioners are urged to take ‘positive action’, to monitor the ethnic composition of the workforce and to formulate target figures to increase the representation of discriminated groups. In the opposing ‘bad idea’ frame, organisations are seriously advised against EEPs with ‘hard’ numerical goals: these policies supposedly are unnecessary and ineffective and have negative unintended consequences. The article draws implications from these findings for future research and practice in the field of EEPs.     

Women leaders—challenges,successes, and other insights from the top

The reasons for the persistent lag of women as leaders are complex. Attrition is an issue for women for many reasons, including traditional gender roles that may affect how women are perceived and the choices they have available (or they make), a lack of role models, the undervaluing of women's traditional communication and leadership styles, and organizational culture. Within medicine (clinical environments) and academic medicine (medical school and clinical environments), it is clear that the lack of women in leadership positions is more than a pipeline or a labyrinth problem. We undertook this case study to better understand the current challenges experienced by women aspiring to leadership positions in medicine and academic medicine. What types of challenges do women face as they move up in an academic or medical environment? And which challenges impact more than others in attaining leadership roles in these organizations: race and ethnicity, differences in leadership style and skills, mentorship and network, life experiences and family responsibilities, organizational culture, or gender? Our study addresses a gap in the literature by examining the leadership experiences of eight successful women in the fields of medicine and academic medicine. The emerging insights from these leaders may be useful for women from diverse backgrounds aspiring to be senior leaders in the future.     

Pay progression in routinised service sector work: navigating the internal labour market in a fast food multinational company

The United Kingdom's widespread use of low-skill, low-paid employment has been well documented. It has been argued internal labour markets (ILMs) benefit such workers, affording them with opportunities for progression. Relatively little is known, however, about the impact of ILMs on entry level workers undertaking routinised service sector work. Drawing on qualitative data, this article explores the prospects on offer in a market leading, fast food multinational company. Potential enabling features include on-the-job training, a transparent and integrated pay structure and a professed culture of progression . Occupational movements to positions above the low-pay threshold are, however, relatively rare. We conjecture this contradiction is the result of the business context in which the firm operates. The findings suggest that in sectors where price leadership strategies dominate, escape from low pay is likely to be exceptional, even within large organisations featuring some of the classic characteristics of ‘pure’ or strong ILMs.     

So what’s the news? Management strategies towards non–union employee representation at News International

In an environment of what would appear to be a widening ‘representation gap’ developing in many organisations, there has been considerable discussion on the effectiveness of non–union employee representation (NER) structures as communication devices and mechanisms for employee involvement, or as a substitute for unions in the collective bargaining process. The underlying debate centres on whether NER forms make trade unions unnecessary, or whether NER forms have a role different from, but complementary to, that of unions at the workplace. The findings of this study suggest that a ‘substitute’ or union avoidance strategy as used at News International Newspapers could have limitations. The implications of not recognising these limitations could result in greater indirect union influence in workplace issues and greater employee dissatisfaction at the workplace.     

Pervasive myths in leadership development: Unpacking constraints on leadership learning

Forty years ago, the questions most discussed among those who cared about leadership were “is leadership possible among those who don't have titles and positions?”; “what are the characteristics possessed by effective leaders?”; and “how do we find the people who are the best leaders and help them prepare for positions that will allow them to have an impact?” After many conversations, conferences, research studies, and books, the terrain has shifted among scholars. Now the conversations focus on questions such as “If leadership is a shared responsibility among members of groups, how can the full leadership potential of all be cultivated?”; “What role do collaborators play in empowering positive leadership and defending against those who misuse it?”; and “How can organizations cultivate cultures that support and encourage visionary leadership dedicated to benefitting all?” The shift in the questions that leadership educators now explore, coupled with the breadth and variety of the initiatives dedicated to nurturing it, demonstrate that leadership can be taught. More importantly, the practice of leadership demonstrates that many can pursue leadership and that they must if the opportunities of the 21st century are to be fulfilled. The conversations and the needs for leadership have both shifted and it is now incumbent on those who value leadership most to agree to unifying perspectives that can draw us together in common purpose. From your vantage point, what are the crucial conversations, next steps, and/or thoughts for consideration as we enter the second decade of the 21st century?     

In Pursuit of Greatness: CEO Narcissism,Entrepreneurial Orientation,and Firm Performance Variance

Building upon the perspective that narcissism is a leadership trait with both ‘bright’ and ‘dark’ sides, the present study examines the question of whether companies led by narcissistic CEOs exhibit higher levels of entrepreneurial orientation (EO). Moreover, this research examines whether EO partially explains why narcissistic CEO‐led firms experience greater variability in firm performance. Using survey data collected from 173 CEOs, and an archival measure of firm performance variance, we find support for our model. These findings offer an improved understanding of how CEO narcissism influences performance variance, and why the firms they lead may even, at times, be viewed as on a path to success. Study implications are discussed.     

Leadership: A journey of sustained performance

Forty years ago, the questions most discussed among those who cared about leadership were “is leadership possible among those who don't have titles and positions?”; “what are the characteristics possessed by effective leaders?”; and “how do we find the people who are the best leaders and help them prepare for positions that will allow them to have an impact?” After many conversations, conferences, research studies, and books, the terrain has shifted among scholars. Now the conversations focus on questions such as “If leadership is a shared responsibility among members of groups, how can the full leadership potential of all be cultivated?”; “What role do collaborators play in empowering positive leadership and defending against those who misuse it?”; and “How can organizations cultivate cultures that support and encourage visionary leadership dedicated to benefitting all?” The shift in the questions that leadership educators now explore, coupled with the breadth and variety of the initiatives dedicated to nurturing it, demonstrate that leadership can be taught. More importantly, the practice of leadership demonstrates that many can pursue leadership and that they must if the opportunities of the 21st century are to be fulfilled. The conversations and the needs for leadership have both shifted and it is now incumbent on those who value leadership most to agree to unifying perspectives that can draw us together in common purpose. From your vantage point, what are the crucial conversations, next steps, and/or thoughts for consideration as we enter the second decade of the 21st century?     

Entrepreneurship education as a new model for leadership education

Forty years ago, the questions most discussed among those who cared about leadership were “is leadership possible among those who don't have titles and positions?”; “what are the characteristics possessed by effective leaders?”; and “how do we find the people who are the best leaders and help them prepare for positions that will allow them to have an impact?” After many conversations, conferences, research studies, and books, the terrain has shifted among scholars. Now the conversations focus on questions such as “If leadership is a shared responsibility among members of groups, how can the full leadership potential of all be cultivated?”; “What role do collaborators play in empowering positive leadership and defending against those who misuse it?”; and “How can organizations cultivate cultures that support and encourage visionary leadership dedicated to benefitting all?” The shift in the questions that leadership educators now explore, coupled with the breadth and variety of the initiatives dedicated to nurturing it, demonstrate that leadership can be taught. More importantly, the practice of leadership demonstrates that many can pursue leadership and that they must if the opportunities of the 21st century are to be fulfilled. The conversations and the needs for leadership have both shifted and it is now incumbent on those who value leadership most to agree to unifying perspectives that can draw us together in common purpose. From your vantage point, what are the crucial conversations, next steps, and/or thoughts for consideration as we enter the second decade of the 21st century?