Contextual Influences on Executive Selection: Firm Characteristics and CEO Experience

This study examines the relationship between antecedent organizational characteristics and the pre-succession experience of individuals chosen as chief executive officer (CEO) – relationships that have received limited attention in past research. A sample of 214 CEO selection decisions was used to test hypothesized relationships between the firm characteristics of size, performance, growth, advertising intensity, risk and individual attributes pertaining to the experience of selected CEOs. Results indicate the following relationships: pre-succession profitability, size and advertising intensity are associated with the chosen executives' organizational tenure levels; pre-succession firm size and risk are associated with the age of selected CEOs; and, pre-succession profitability and advertising intensity are associated with type of functional background experience. Findings provide new insights into the relative importance of pre-succession experience associated with different organizational contexts in CEO selection decisions.     

Divestiture and Its Implications for Innovation and Productivity Growth in U.S. Telecommunications

This study has sought to determine the impact of policy changes that led to the breakup of the monopoly structure of U.S. telecommunications on productivity and research activities of AT&T. A simultaneous-equations model is used to examine the relationship between research intensity, market share, firm size, and total factor productivity (TFP) before and after divestiture. The results show that the effect of divestiture on productivity is negative but that competition has a significantly positive effect. Contrary to popular argument, competition led to significant increases in R&D investment by AT&T. The study also finds a strong and positive relationship between R&D and productivity in the postdivestiture period, marked by its absence in the predivestiture years. Scale economies remain important, indicating the industry continues to favor large firms.     

THE WEEKEND EFFECT AND CORPORATE DIVIDEND ANNOUNCEMENTS

Numerous studies document a day-of-the-week effect in stock returns. Although a common explanation for this phenomenon concerns a potential daily pattern in the release of corporate information, existing studies provide conflicting evidence. To aid in resolving this issue, possible seasonalities in a sample of 138,824 dividend announcements are investigated over twenty-six years across 3,484 firms. Tests provide no support for the information hypothesis and suggest that the anomalous pattern of returns is driven by some factor unrelated to information arrivals.     

Optimal administrative geographies: An algorithmic approach

Centrally planned Beveridge healthcare systems typically rely heavily on local or regional “health authorities” as responsible organisations for the care of geographically defined populations. The frequency of reorganisations in the English NHS suggests that there is no compelling unitary definition of what constitutes a good healthcare geography. In this paper we propose a set of desirable objectives for an administrative healthcare geography, specifically: geographical compactness, co-extensiveness with current local authorities and size and population homogeneity, and we show how these might be operationally measured. Based on these objectives, we represent the problem of how to partition a territory into health authorities as a multi-objective optimisation problem. We use a state-of-the-art multi-objective genetic algorithm customised for the needs of our study to partition the territory of the East England into 14 Primary Care Trusts and 50 GP consortia and study the tradeoffs between objectives which this reveals.     

Price leadership and firm size asymmetry: an experimental analysis

We use laboratory experiments to examine the effect of firm size asymmetry on the emergence of price leadership in a price-setting duopoly with capacity constraints. Independent of the level of size asymmetry, the unique subgame perfect equilibrium of our timing game predicts that the large firm is the price leader. Experimental data show that price leadership by the large firm is frequent, but simultaneous moves are also often observed. Profit outcomes in the previous period affect the subjects’ decisions to announce or wait in a way that hampers convergence to the equilibrium. Furthermore, while both small and large firms display a strong tendency to wait to announce their price when firm size asymmetry is low, they often set prices early when size asymmetry is high. Prices are higher when price setting is sequential rather than simultaneous and when firm size asymmetry is high. Hence, price leadership by either type of firm has an anti-competitive effect that is more pronounced when the size difference between firms is large.     

Organizational fit and acquisition performance: Effects of post-acquisition integration

Based on 173 acquisitions in the U.S. manufacturing industry, this study examines the impact of organizational differences between acquiring and acquired firms on post-acquisition performance. The findings indicate that differences in top management styles have a negative impact on performance in acquisitions characterized by both high and low levels of post-acquisition integration. However, no such relationship was observed between differences in the reward and evaluation systems and post-acquisition performance in either the high or low integration subgroups. Implications of the findings, along with directions for future research, have been discussed in the concluding section of this paper.     

Learning with noiseless information and payoff-relevant signals

Summary. In models of active learning or experimentation, agents modify their actions to affect the distribution of a signal that provides information about future payoffs. A standard result in the experimentation literature is that agents experiment, if at all, to increase information. This finding is a direct consequence of Blackwell's theorem: one experiment is more informative than another if and only if all expected utility maximizers prefer to observe the first. Blackwell's theorem presupposes, however, that the observed signal only conveys information and does not directly affect future payoffs. Often, however, signals are directly payoff relevant, a phenomenon that we call signal dependence. For example, if a firm is uncertain about its demand and uses today's sales as a signal of tomorrow's demand, then that signal may also directly affect tomorrow's profit if the good is durable or if consumers form consumption habits. Datta, Mirman and Schlee [9] and Bertocchi and Spagat [4] show that, if the signal is payoff relevant, experimentation may indeed reduce information. Here we show that, despite the inapplicability of Blackwell's Theorem, agents always experiment to increase information if the information structure is noiseless: given the true value of the unknown parameter, the signal realization is deterministic. We then apply our framework to analyze Lazear's [16] model of retail clearance sales, a model with both signal dependence and noiseless information. Received: February 19, 1999; revised version: August 11, 1999     

Contractual Mix Between Cash and Kind Wages of Casual Workers in an Agrarian Economy

A two‐agent general‐equilibrium model is developed for explaining the mix of wage payment between cash and kind among landowners and workers. Its focus is on how, in the absence of insurance instruments but in the presence of heterogeneous tastes and attitudes toward risk among agents, the payment mix between cash and kind can serve as a welfare‐improving, risk‐hedging device. The model is used to determine how this optimal mix of wage payment would be affected by changes in risk‐aversion, consumption preferences, technology, price risk, and production risk. While the complexity and nonlinearity of the model make it impossible to obtain clear‐cut analytical results, simulation results are derived and shown to be rather robust. These results are also broadly supported by the findings of a small‐scale survey of agricultural wage contracts in India.     

The influence of international networks on internationalization speed and performance: A study of Czech SMEs

Drawing on social capital theory and the international entrepreneurship literature, we develop hypotheses relating the structural, cognitive and relational aspects of the international network of SME CEOs to two internationalization outcomes – speed and performance. The study is based on a sample of 155 Czech SMEs covering a broad range of manufacturing industries. Our findings indicate that firms sharing a common language with their international ties are able to internationalize faster than firms that do not share a common language. Moreover, we observe that geographically diverse networks contribute to superior performance. Extensive reliance on personal contacts hinders the performance of the first international venture.