Succession planning vs. agency theory: a test of Harris and Helfat's interpretation of plurality announcement market returns

Article Abstract:

This article examines the response of the stock market to announcements of different types of executive successions. Topics addressed include agency costs, succession planning, and organizational structure.

Planning, Statistical Data Included, Analysis, Stock-exchange, Stock exchanges, Business planning, Chief executive officer successions

---

One hat too many: key executive plurality and shareholder wealth

Article Abstract:

An empirical study is conducted to determine the effects of the announcements of increases in executive plurality on shareholder wealth. The history of the career paths of leading executives of the 1990 Business Week ranking of the 100 most important publicly-held companies is examined to test the hypothesis that the stock market will react unfavorably to the announcement that a company's highest executives have accepted an additional post and have consolidated authority within the firm. The study also tests the assumption that the market will react negatively when the titles of president, CEO and chairman of the board are integrated, than when only two of these titles are consolidated. The findings indicate that the extent of position consolidation is proportional to the level of negativity of shareholder responses.

Officials and employees, Corporate directors, Stockholders, Appointments, resignations and dismissals, Beliefs, opinions and attitudes, Corporations, Executives

---

CEO duality, succession-planning and agency theory: research agenda

Article Abstract:

Harris and Helfat (1998) offer a fresh and unique explanation for the findings of the 1997 study conducted by Worrell et al. Results of this paper show a negative stock market reaction to announcements that a single individual has taken the three executive positions of CEO, Chairman and President. The study found no reaction when an executive in one position is given one other title but found positive reaction when outsiders take two or three titles. According to the researchers, the results provide weak support to agency theory, which posits that directorial boards can more effectively track management performance, thereby improving performance, if major executive posts were divided between two or more people. However, Harris and Helfat contend that these reactions are due to investor concerns about succession planning and executive abilities. However, while plausible, their arguments need to be bolstered by further empirical tests.

Research, Executive ability, Agency theory

Similar abstracts:

• Abstracts: Asymmertric information and joint venture performance: theory and evidence for domestic and international joint ventures
• Abstracts: The relative influence of industry and corporation on business segment performance: an alternative estimate. The free cash flow hypothesis for sales growth and firm performance
• Abstracts: A review and assessment of recent developments in the revised innocent spouse rules. Guidance from the IRS on making reverse-Starker exchanges
• Abstracts: Deutsche mark-dollar volatility: intraday activity patterns, macroeconomic announcements, and longer run dependencies
• Abstracts: Narrowing the gap: Disciplined approaches can measure and improve advertising's yield. New Pricing Realities

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.