Old captains at the helm: Chairman age and firm performance

This paper examines whether the chairmen of the boards (COBs) impose their life cycles on the firms over which they preside. Using a large sample of unlisted firms, we find a robust negative relation between COB age and firm performance. COBs age much like ‘ordinary’ people. Their cognitive abilities deteriorate, and they experience significant shifts in motivation. Deteriorating cognitive abilities are the main driver of the performance effect that we observe. The results imply that succession planning problems in unlisted firms are real. Mandatory retirement age clauses cannot solve these problems.     

Discussion of “Nowcasting US GDP: The role of ISM Business Surveys”

This paper discusses the contribution of Lahiri and Monokroussos, published in the current issue of this journal, where they investigate the nowcasting power of ISM Business Surveys for real US GDP. The second part of this note includes some empirical considerations on nowcasting quarterly real GDP by using the monthly PMI index for Switzerland. The results indicate that the Swiss PMI is not leading GDP growth; rather, it is coincident, and its nowcasting power is quite good. The signs of the fitted values mostly correspond to the sign of the actual GDP growth, and the important turning points are identified accurately by the model. This also holds true during the recent crisis.     

Factors influencing final examination performance in large versus small sectons of accounting principles

This study examines the relationship between certain student characteristics and final examination performance in small and large sections of Accounting Principles. Some of the analyses indicated that successful students in the large section had higher GPAs, were further along in their education, and had more experience with and a preference for large sections. Students in the large section, however, sought more outside assistance and believed the large section was detrimental to their learning. No significant success factors could be identified for the small sections. These results suggest that small sections met the needs of a greater variety of students, thus contributing to a lower withdrawal rate — but equal examination performance —of the small section students.     

Theory of city system structure

In this paper, a model of city systems is presented which is then used to discuss the normative problem of finding the optimum number of cities accomodating a given national population. The problem is related to that of determining, in the presence of scale economies, the optimum number of firms producing a given industry output at least cost. Therefore, recent findings of the literature on industrial organization can be adopted to our model of city systems. It is shown in which sense commonly observed deficits of local governments can be taken aspointing towards an excessive number of existing communities.     

Bimodal System Dynamic A Technology Assessment and Forecasting Approach

Technology assessment and science forecasting are based on the long-term forecasting of important processes within complex systems. The Bimodal System Model was developed for their modeling. The system dynamics and the system itself are based on the combined action of two forces: the evolutive intrinsic dynamics and the decisionistic formation. Evolutively intrinsic dynamic forces emerge from two basic principles: assimilation and comprehension (the basis of any individual endeavor) and exchange and interchange (the heart of any communication and interaction between individual people, groups, associations). These forces are solely induced by individual optimization of benefits related to material goods and ideas. From the point of view of their emergence they are heterogeneous and chaotic and are neither globally nor centrally planned. Their effect in a system occurs a million-fold, however uncoordinated. Intrinsic forces are insensitive to other effects (e.g., decisionistic or formative) due to their million-fold, heterogenous origin. Decisionistic formative forces deploy their effect in a system when a community is conscious of being a subject and as such is capable of expressing and translating its coordinated will (decision). The decisionistically formative forces can produce a consistent effect when they are aligned to the evolutive intrinsic forces and utilize their dynamics in a required manner. Therefore, process-oriented priorities must be construed in the course of consensus formation, determination of aims and headroom evaluation, which would allow a concerted and sustained application of the available forces.     

The effect of corporate social responsibility on stock performance: new evidence for the USA and Europe

This paper provides new empirical evidence for the effect of corporate social responsibility on corporate financial performance. In contrast to former studies, we examine two different regions, namely the USA and Europe, and disentangle firm and sector specific impacts. Our econometric analysis shows that environmental and social activities of a firm compared with other firms within the industry are valued by financial markets in both regions. However, the respective positive effects on average monthly stock returns between 2003 and 2006 are more robust in the USA and, in addition, non-linear. Our analysis furthermore points to biased parameter estimates if incorrectly specified econometric models are applied: the seemingly significantly negative effect of environmental and social performance of the industry to which a firm belongs strongly declines and mostly becomes insignificant if the explanation of stock performance is based on the Fama–French three-factor or the Carhart four-factor models instead of the simple Capital Asset Pricing Model.     

Shareholder Value: Principles, Declarations, and Actions

This paper is about shareholder value. We examine whether welfare considerations justify that target and whether competitive markets force firms to pursue it. We also argue that shareholder value is strictly an ill-defined goal. We report evidence from a large sample of listed firms across the world that many managers do not even mention shareholders in their mission statements. However, firms that do disclose a commitment to shareholders seem to perform better in terms of stock price and operating performance.     

BALANCING ACTS: NPO-LEADERSHIP AND VOLUNTEERING

Volunteering is regarded as an increasingly important phenomenon and the 'employment' of volunteers as one of the typical traits of nonprofit organizations. However, the consequences of volunteering for everyday practices of NPO-leadership, i.e. the question of how non-paid employees are treated in settings where formal power is lacking, have so far not received the attention they deserve. Our paper discusses practices for leading without formal power by presenting findings from an empirical research project. Using a Grounded Theory approach, we identify five interrelated practices that question conventional notions of transformative or charismatic leadership.     

The outperformance of family firms: the role of variance in earnings per share and analyst forecast dispersion on the Swiss market

Recent studies provide empirical evidence that family firms are outperforming their non-family counterparts in terms of stock market performance. For the Swiss stock market we find that family firms indeed outperform their non-family counterparts after controlling for firm size and beta. In addition, our data shows that family firms display more stable earnings per share in contrast to their non-family counterparts. Furthermore we find that the variance of earnings per share positively affects analyst forecast dispersion. According to anomaly literature, lower analyst forecast dispersion has been found to induce higher excess return, which our data supports for the Swiss stock market. By linking variance of earnings per share, analyst forecast dispersion and stock performance we provide an insightful explanation for the excess stock market returns of family firms. In addition, our text extends the theory of dispersion effect with an additional empirical element, the variance of earnings per share.