Yearly Archives: 2011

CEO Education, CEO Turnover, and Firm Performance

Posted by R. Christopher Small, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on
Monday, January 3, 2011
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The following post comes to us from Sanjai Bhagat, Professor of Finance at the University of Colorado; Brian Bolton of the Finance Department at the University of New Hampshire, and Ajay Subramanian of the Risk Management and Insurance Department at Georgia State University.

In the paper, CEO Education, CEO Turnover, and Firm Performance, which was recently made publicly available on SSRN, we analyze the effects of CEO education on CEO turnover (firing and replacement) and firm performance. Our primary interest is on the role that CEO education plays in a firm’s decision to replace its current CEO, the role that it plays in selecting a new CEO, and on whether CEO education significantly affects performance.

We use six main measures of CEO education: whether or not the CEO attended a Top-20 undergraduate school, whether or not the CEO has an MBA, law or masters‟ degree, and whether or not the MBA or law degree is from a Top-20 program. Our study includes more than 14,500 CEO-years and more than 2,600 cases of CEO turnover from 1993-2007.

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Trends in Asset Allocation and Portfolio Composition

Posted by Matteo Tonello, The Conference Board, on
Sunday, January 2, 2011
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This post comes to us from Matteo Tonello, Director of Corporate Governance for The Conference Board, Inc., and is based on a recent paper published by the Conference Board, which is available here.

In its annual Institutional Investment Report, which was released on November 11, The Conference Board provides a comprehensive analysis of the asset growth and portfolio composition of institutional investors operating in the United States. It documents the presence over 30 years of different types of institutional investors in single asset classes such as equity, debt securities, alternative instruments, and foreign securities, drawing on data from a wide range of sources. This year’s report includes definitive data for 2009 and focuses on the impact of the financial market rebound on institutional asset value and investment decisions.

Following 2008’s dramatic decline of the securities markets, by the end of 2009 the investment industry had registered substantial gains across virtually all classes of financial instruments, with total institutional assets rising 14 percent to $25,351.1 billion—a level similar to that recorded between 2005 and 2006. This constitutes an extraordinary upward movement from the 21.3 percent plunge of 2008, albeit still far from the best performances of an industry that between 1995 and 2007 had experienced unprecedented growth of 23.3 percent on an annualized basis. Of course, the historical significance of this finding should also be put in context with the new economic uncertainties and the added market volatility of the last few months.

The following are the other major findings discussed in the report.

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