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Research seminar with Professor Magarethe Wiersema
October 25, 2013 @ 12:00 pm - 1:30 pm
Margarethe F. Wiersema holds the Dean’s Professorship in Strategic Management at The Paul Merage School of Business, University of California, Irvine. She has an MBA and Ph.D. from the Ross School of Business at the University of Michigan.
Professor Wiersema is internationally recognized as one of the leading experts on corporate strategy and CEO succession and replacement. She has published extensively in the premier journals in the field including the Harvard Business Review, Strategic Management Journal, the Academy of Management Journal, and Administrative Science Quarterly. Her research is widely acknowledged by over 3500 citations and she has been quoted by the New York Times, The Financial Times, The Economist, Fortune, Business Week, the Washington Post, and her research has appeared in The Economist Intelligence Unit for their “Executive Briefing”.
CEO Appointments: the Role of Investment Analysts
The appointment of a new CEO is among the most pivotal and visible decisions made by the board of directors. Yet while much research explores how firm performance, governance structures, and types of succession affect the appointment decision, we have less understanding of the influence of contextual factors such as external constituents. This paper is the first to explore how one key constituent –investment analysts –may shape the appointment decision, specifically through serving as an information intermediary for the board. Because CEO succession creates uncertainty regarding the firm’s future leadership and its strategic direction, we propose that investment analysts, as knowledgeable experts who provide research coverage on the firm, provide the board with information that may influence not only the succession decision, but also their selection of a new CEO. Using panel data on S&P 500 companies for the 2000-2005 period, we find evidence that analyst recommendations convey information about a firm’s top management and the appropriateness of its strategy that is reflected in the appointment decision. More negative analyst ratings lead to a higher probability that the board will appoint an outsider CEO and also make the board more likely to appoint a high status CEO.