A Matter of “Simple Calculus”
Shareholders and the stock market agree: CEOs have always demanded respect, but their roles have never been as important as they are today. Performance counts.
Starting in 1950 and continuing through the next 60 years, there have been 193 CEOs who unexpectedly passed away. No one really understood the impact their deaths had on their companies’ market performance.
Tim Quigley, an assistant professor of management with the College of Business and Economics, investigated 60 years of stock market trends before finding that stock market reaction nearly doubled—for better or worse—upon news of a CEO’s death during that time.
"When a CEO passes unexpectedly a shareholder is left to perform some simple calculus. Did the passing CEO possess exceptional, average, or poor ability?” asked Quigley. The results were surprising. "Shareholders clearly place a greater emphasis on the individual heading publicly traded corporations today versus these earlier periods,” he says.
Quigley is among the college’s most recent hires, joining the faculty in 2011. His research is focused on managerial discretion, or how and when CEOs and other top executives impact organizational outcomes, the causes and outcomes of CEO succession, and how these have changed over the course of time.