Well, it might be that the immediate response of some of you would be a straightforward “Yes”, or in some cases possibly a “No”. However, there seem to be management scholars, who try to provide research-driven answers to this question. In so doing, three of them investigated the effects of CEOs on an organisation’s performance by studying the effect of a) CEO deaths and b) the deaths of CEOs’ immediate family members, such as spouses, parents, and children. In the abstract of their paper they claim that their research demonstrates “that managers are a key determinant of firm performance” (p. 1). Aha!
Unsurprisingly the death of a CEO has significant negative impacts on a firm’s profitability, investment, and sales growth. Well, what else would we have expected? Likewise, we would have kind of expected “that the loss of a child obtains the largest estimated effects on profitability, followed by the death of a spouse” (p. 4), wouldn’t we. However, I found it truly surprising that “the death of a CEO’s mother-in-law generates a positive but insignificant effect on performance” (p. 5).
Without going deeper into the study or the paper, I wonder what these findings may tell us. Corporations apparently should not wait until their CEO becomes so old that this person inanimately falls of the executive chair, in case they want to avoid a decline in their profitability. It may also be wise beginning to recognize that – surprise, surprise – CEOs are human beings and therefore they have emotions. How could they actually dare? Finally, I thought about the mother-in-law finding. Well, perhaps firms should think about hiring a CEO, whose mother-in-law is somewhat elderly…
Here is the link to the full article: