Font Size

Notice body

A study of corporate boards of directors co-authored by associate professor Michelle Zorn and Harbert Eminent Scholar Dave Ketchen was featured in the Dec. 12 edition of The Wall Street Journal. The study examined directors who helped to hire a chief executive officer who then led the company to poor performance. These directors' desire to avoid looking bad led them to be overly reluctant to fire poorly performing CEOs and to favor overpaying the CEOs despite their failures. One implication is that some board turnover after hiring a new CEO is healthy. There’s no guarantee, but the study found that replacing just one of the directors who helped hire the CEO increases the chances of removing a poorly performing CEO by about 20 percent.

The study is available at https://www.wsj.com/articles/boards-may-have-a-hidden-bias-toward-the-ceos-they-chose-11576170708?shareToken=st0b3d7da4d1b74096bf09b41e33ef54dd&reflink=article_email_share.