Craig Crossland

Executive Accountability Around the World: The Sources of Cross-National Variation in Firm Performance - CEO Dismissal Sensitivity

In this study, we investigate why CEOs seem to be held more accountable for poor firm performance in some countries than others. We integrate research from comparative corporate governance and agency theory to identify and evaluate four fundamental assumptions underlying most theoretical arguments linking performance and dismissal: (1) CEOs are personally responsible for firm performance outcomes; (2) boards/owners have the power to dismiss CEOs; (3) firm performance measures are meaningful; and (4) suitable alternative candidates for the CEO role are available. We argue that CEO accountability will vary in line with the extent to which these assumptions are more or less valid from one country to the next. We provide robust evidence – across both market-based and accounting based measures – that CEOs are more likely to be dismissed following poor firm performance in countries where managerial discretion is high, where firm performance measures are more meaningful, and where the CEO labor market is more developed. However, we do not find support for our prediction that CEO accountability varies in line with cross-national differences in CEO power asymmetry.

Do CEOs receive the pay they deserve? A new vantage on a familiar question

Purpose This paper aims to explore the implications of Aguinis and colleagues’ study, and in particular their claim that the inconsistency between chief executive officer (CEO) pay and CEO performance is reflective of a fundamental injustice. In doing so, the authors highlight issues regarding the meaning of fairness in the context of CEO pay, the extent to which CEOs can personally affect firm performance and the challenges in ascertaining whether CEOs are overpaid, underpaid or appropriately paid. Design/methodology/approach The authors use a conceptual approach, integrating research on executive compensation and managerial discretion to lend nuance to Aguinis and colleagues’ arguments and findings. Findings The main takeaway of the commentary is that CEO pay fairness is a complex and multifaceted matter that can be difficult to broadly characterize. The evidence offered by Aguinis and colleagues regarding power law distributions and the weak overlap between CEO pay and CEO performance is compelling, but questions about income inequality and pay fairness rarely lend themselves to straightforward answers. Some caution is thus warranted when evaluating Aguinis and colleagues’ conclusion that the US CEO labor market is pervasively unfair. Originality/value The authors urge scholars who build on the work of Aguinis and colleagues to pay heed to the challenges in reconciling the twin concepts of CEO pay and CEO performance.

Can you Believe it? Managerial Discretion and Financial Analysts’ Responses to Management Earnings Forecasts

Abstract Financial analysts act as crucial conduits of information between firms and stakeholders. However, comparatively little is known about how these information intermediaries evaluate the believability and importance of corporate disclosures. We argue that a firm’s level of managerial discretion, or latitude of executive action, acts as a cue for financial analysts, which helps them interpret and respond to voluntary management earnings forecasts. Our study provides strong, robust evidence that financial analysts find management forecasts significantly less believable in low-discretion than in high-discretion environments, and therefore tend to be much less responsive to these forecasts. We also show that managerial discretion is especially impactful on analysts’ responses in those circumstances where analysts are typically most uncertain about how to interpret management forecasts.

Fast and Rigorous: Configurational Determinants of Strategic Decision-Making Balance

Individual strategic decisions are the foundation of a firm’s long-term competitiveness and performance. However, when making such decisions, firms face dual pressures: the desire to ensure a thorough decision-making process, and the concurrent need to ensure that a decision is made in a timely manner. In our study, we examine the configurational underpinnings of strategic decisions that are both fast and rigorous. Using a novel primary dataset, a range of CEO/leader and TMT characteristics taken from the existing literature, and an inductive analytical approach (fuzzy set qualitative comparative analysis), we identify and discuss six leader-team configurations associated with a decision property we label strategic decision-making balance, which characterizes decision processes that simultaneously achieve rigorous intra-team debate, significant divergent idea reconciliation, and fast decision speed.

Multi-Firm Collaboration and International Competitive Dynamics

A new form of organizing is emerging in the world of international business (IB) called the multi-firm collaborative network (Miles et al., 2005). Its core competence is the ability to collaborate among a group of firms in both the creation and application of knowledge. For firms that have, or can develop, the ability to collaborate across organizational, geographical, and cultural boundaries, this new means of organizing will allow them to pursue strategies and grow in a manner that has heretofore been largely unattainable.