Using Corporate Governance to Shield Executives

While anti-takeover provisions (ATPs) are a relatively common aspect of corporate governance, Ron Masulis, Frank K. Houston Professor of Management in Finance, discovers that more ATPs increase the likelihood of less profitable or money-losing acquisitions. Moreover, acquisition announcements by firms with more ATPs tend to generate lower returns for investors. [Read More]

Earnings Management:
Short Term Gains, Longer Term Costs

To avoid the "earning torpedo" that follows a shortfall against analysts’ projections, public companies often engage in “earnings management"—repurchasing outstanding stock or swapping fixed rate debt to lower floating rates. While such maneuvers may spare hits to a stock price in the short term, Nicole Jenkins, associate professor of accounting, finds that the market refuses to bestow the kind of stock price reward that it would give to companies that improved performance in more substantive ways. [Read More]

Category Captains: Who’s in Charge?

Though few consumers are aware of it, their retail shopping experiences increasingly are influenced by “category captains”—manufacturers who are engaged by retailers to offer recommendations on product offerings and merchandising in categories ranging from oral care to infant formula. Professor Mumin Kurtulus has studied this growing phenomenon extensively. By sharing their superior knowledge of customer preferences, category captains can help retailers increase sales and, at least in the short run, reduce costs. But, at what cost? Kurtulus captures concerns about the power shift between retailers and manufacturers as well as competitor antitrust claims. [Read More]

More Not Always Better for Employee Retention

According to conventional wisdom, the more human resource (HR) practices you use to develop people—particularly at the managerial level—the better the results. However, a comprehensive study by Timothy Gardner, associate professor of organization studies, found that the “more is better” theory doesn’t always hold water, and that some HR systems—like skill enhancing practices and programs—can actually lead to greater voluntary turnover. [Read More]

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