Yvan Allaire

Theories of Organizational Culture

The notion that organizations may have specific cultures is found sprinkled in a vast array of publications on strategy and business policy, on organizational behaviour and theory. Although the absence of a solid theoretical grounding for the concept of organizational culture has been frequently lamented, little effort has been exerted to bring within the perimeter of the management and organizational field the relevant concepts found in cultural anthropology. The purpose of this paper is therefore three-fold: First, to provide a typology of schools of thought in cultural anthropology in order to understand the diverse and complex theories of culture advanced in this field; Second, to relate these different points of view to the emerging notions of organiza tional culture found explicitly or implicitly in the management and organization literature; Third, to pull together the insights and findings derived from this enquiry in order to propose an integrative concept of organizational culture as a useful metaphor for studying the processes of decay, adaptation and radical change in complex organizations.

Strategic plans as contracts

Abstract No matter how unsettling, executives should think of strategic planning as a form of contract. Managers who receive, evaluate and monitor plans are very much like principals in their dealings with agents-managers who prepare, defend and implement these plans. The former cannot observe every move, every decision and action of the latter. So they must rely on various means of inducing the agents-managers to propose and implement plans which are optimal for the corporation. This paper shows how familiar issues and problems with strategic planning take a different dimension when the planning process is viewed as a contractual relationship: 1. (1) By identifying several planning models and showing where and when each is appropriate, the paper helps to understand the potential for frustration that results from a poor fit between a planning system and the firms circumstances; 2. (2)By depicting the powerful forces which push and shove corporations away from effective strategic planning modes, the paper singles out a set of conditions for high performance strategic systems; 3. (3)By formulating recommendations and words of caution to strategic planners and CEOs, the paper may help to improve the performance of a much maligned but essential management process.

A model for the evaluation of risk and additional information in new product decisions

AbstractThis paper proposes a normative model for decision-making regarding the purchase of additional information with respect to a new product decision. A macro structure of the decision leads to an analytical evaluation of the GO-NO GO alternatives. A formulation for the computation of the expected opportunity loss adapted to this type of problem is then proposed. The value of perfect information on each variable of the model is computed and provides an indication of the sensitivity of the overall results to uncertainty in any particular variable. The value of any proposed research project may then be evaluated by comparing the expected reduction in opportunity loss that might result from the purchase of the information with the cost of such information.

Pershing Square, Ackman and CP Rail: A Case of Successful 'Activism'?

Pershing Square, an activist hedge fund owned and managed by William Ackman, began hostile maneuvers against the board of CP Rail in September 2011 and ended its association with CP in August 2016, having netted a profit of

The Value of 'Just Say No': A Response to ISS

2.6 billion for his fund. This Canadian saga, in many ways, an archetype of what hedge fund activism is all about, illustrates the dynamics of these campaigns and the reasons why this particular intervention turned out to be a spectacular success… thus far.This paper presents an in-depth analysis of this unique case and explores the factors explaining the success of the activist intervention. Some lessons for corporate governance are also outlined as conclusion.

Hedge Fund Activism and Their Long-Term Consequences: Unanswered Questions to Bebchuk, Brav and Jiang

On October 22nd 2014, ISS published a note on the financial consequences for shareholders to vote “NO�? to a proposed takeover (available in an article by Steven Davidoff Solomon, “The Consequences of Saying No to a Hostile Takeover Bid�?, published on October 28th, 2014, in the New York Times DealBook). ISS claims to have demonstrated that those shareholders who voted “No�? to a proposed takeover of their company would have been better off financially, had they agreed to the takeover. Unfortunately, the ISS note does not support such a blanket statement. Our take on the ISS paper highlights many debatable aspects of their analysis. We show that the paper produced by ISS to support the position of hostile bidders falls flat. It is marred by dubious analytical choices, questionable metrics and the remarkable absence of a key investment parameter, the risk/return relationship.

Hedge Funds as Activist Shareholders: Passing Phenomenon or Grave-Diggers of Public Corporations?

In our paper “Activist” hedge funds: creators of lasting wealth? What do the empirical studies really say?” (available here), we asked Lucian Bebchuk, Alon Brav and Wei Jiang questions of the sort that any referee/reviewer for a professional journal would raise about their paper The Long-Term Effects of Hedge Fund Activism. Their paper’s aim is to examine the empirical basis for “the long-standing claim that activist interventions are followed by declines in long-term operating performance”.The reply we got from Professor Bebchuk was essentially that he had already answered all our questions in his reply to Wachtell Lipton “Don’t run away from the evidence” and that our paper was not academically rigorous because “it expresses an opposition to relying on empirical evidence”. He is wrong on both counts.First, we must inform Bebchuk that we were once of the faith, believers in the power of statistical analysis to prove and disprove any and all assertions about social phenomena. We were, in short, empirical positivists who, like Bebchuk et al, asserted the superiority of statistical evidence and quantitative analysis over experience-based empirical knowledge and derided the “self-reported impressions of business leaders”.After running hundreds, if not thousands, of multivariate analyses since my days at MIT, having taught for years doctoral seminars on multivariate analysis, I (Allaire) grew increasingly doubtful that the tool kit of multivariate analysis always provided a superior grasp of complex social phenomena.The ease of use and the power of computer algorithms produced a surfeit of papers with exaggerated claims, which did not withstand the scrutiny of expert analysis or the passage of time.Too often, today’s study and results are contradicted by tomorrow’s study. Results vary and swing in significance as a consequence of slight changes in the definition of sample and variables, in the structure of equations, in included/omitted variables, in ways of dealing with several statistical pathologies, and so on.For instance and for the benefit of readers who are not specialists in esoteric statistical analysis, let’s examine briefly the issue of what causes deadly car accidents.Several dozen statistical studies have been carried out to establish the correlates of deadly car accidents. Some find that speed limits do not have any statistically significant impact, other studies actually do; some find that seat-belt laws have an impact, others don’t; generally, studies agree on the negative role of alcohol consumption but in some studies, this variable is just barely significant; age of driver is sometimes a significant factor, sometimes not; sex of driver also; even use of cell phones while driving is sometimes a significant factor, in other studies, it is not. To try to fully account for the multiple factors, some studies include up to 50 variables (time of accident, weather conditions, lighting conditions, road conditions, etc.). Of course, there is high likelihood of interactions (of the non-linear type) among variables (time of accident, weather conditions, speed, alcohol consumption for instance may well interact in complex fashion). But to include all potential interactions would consume large number of degrees of freedom and make interpretation of results very difficult.Another type of empirical evidence comes from the police investigators who have examined hundreds of deadly accidents and developed a sophisticated understanding of the key contributing factors.What should policy makers do? Rely on the conclusions, variable in time, contradictory across studies, of researchers far removed from actual deadly car accidents or should they listen to the empirical observations of investigators with years of experience in the field?Now to our case. Bebchuk, Brav and Jiang claim to have conclusively shown that “activist interventions are followed by improved operating performance during the five-year period following the intervention”.Their findings were broadcast widely, including in a Wall Street Journal op-ed by Professor Bebchuk (August 7th 2013).In spite of the limited aim for their study (“whether the long-standing claim that activist interventions are followed by declines in long-term operating performance”), Bebchuk, Brav and Jiang get carried away and associate hedge fund intervention to the subsequent performance of companies long after the hedge funds have sold their shares.One must examine closely the empirical basis for such claims of a quasi-causal relationship as one should for a study purporting to show that hedge funds do great harm.

Profil psychologique des étudiants canadiens-français au M.B.A. : conséquences pour une politique de sélection

The recent wave of corporate scandals has placed corporate executives and boards of directors in the cross hairs of public opinion. However, the tactics of some new wave investors, particularly some breed of hedge funds (which would be more aptly called speculative funds), and their relentless efforts to commoditize industrial firms may bring the investor community under closer scrutiny. By their very actions and successes, hedge funds of the speculative kind are raising a number of very serious issues about the future of corporations and even about their impact on the industrial structures of countries.This paper stresses several points and arguments made by key researchers:1. The realities of contemporary stock markets are made of high stock churn rate, short holding period, vote buying activities, record date capture, short selling, stock lending, huge volume of stock derivatives, fairly long period of time between record date and date of annual meeting. As a result, the common assumptions underlying corporate democracy have been made obsolete; the huge volume of share trading by hedge funds is a major contributing factor to these developments;2. Some variants of hedge funds are now in the business of pressuring management and directors to undertake actions they deem likely to boost share prices; to enhance their ability to achieve their ends, they take full advantage of the anomalies and imperfections of corporate democracy;3. A significant presence in the shareholder base of a company of short-term, transient investors does have an impact on the way a company is managed;4. In the contemporary world of finance, the one-share/one-vote incantation rings hollow; it may be sub-optimal and a source of serious distortions;5. Unfettered trading in the control of companies, as if they were a commodity, a metal, or a piece of commercial real estate, may be the goal of some players in the financial markets; but the aggressive pursuit of that goal may bring about government policies and popular attitudes far less beneficial to reasonable investors.This paper reviews the range of options proposed to curtail their ability to do harm. As documented by Black and Hu (2006a,b) and Martin and Partnoy (2005), their ability and willingness to capitalize on the weaknesses of corporate democratic processes raise serious issues, which have led to calls for measures to fence in these funds and limit the damages they may inflict on societies.