Mark R. Huson

Internal Monitoring Mechanisms and CEO Turnover: A Long-Term Perspective

We report evidence on chief executive officer (CEO) turnover during the 1971 to 1994 period. We find that the nature of CEO turnover activity has changed over time. The frequencies of forced CEO turnover and outside succession both increased. However, the relation between the likelihood of forced CEO turnover and firm performance did not change significantly from the beginning to the end of the period we examine, despite substantial changes in internal governance mechanisms. The evidence also indicates that changes in the intensity of the takeover market are not associated with changes in the sensitivity of CEO turnover to firm performance.

The impact of just-in-time manufacturing on firm performance in the US

Just-In-Time manufacturing has been subjected to numerous studies both empirical and methodological. This work attempts to measure the impact of JIT on accounting measures of performance. Most technologies and investments are justified on the basis of their impact on financial and accounting measures which are not easily quantified. Our empirical methodology, simultaneous equation estimation, allows us to isolate the partial effects of JIT on various accounting measures thus gauging the true impact of this method on firm performance. Our results show that after JIT adoption firms reduced the labor content in facilities, increased inventory turnover and enhanced earnings. There was no significant impact on prices charged by the firm. These results support the anecdotal evidence on JIT and the theoretical work done by various authors. Even though the firms studied experienced a downturn in their performance our empirical methodology could identify positive benefits resulting from JIT adoption.

Choice of Organizational Form as a Trade-Off Between Fit and Market Timing

This paper proposes that a firms choice of organizational form is a trade-off between the fit with its investment opportunity set, and its attempt to exploit periods of favourable market valuations for a given organizational form. To test this prediction, we identify 272 firms that go public in Canada between 1995 and 2005. Of these, 128 choose the organizational form of public corporation, while 144 choose the alternative organizational form of income trust. We find that market timing affects the choice of organizational form. An increase in valuations for income trusts relative to public corporations increases the likelihood that a firm will go public as an income trust. Using propensity score matching, we also show how market timing driven choices allow firms to maximize the proceeds through reduced initial underpricing and reduced underwriting fees.