04 February 2014

In business, there are a lot of awards. There are a lot of organizations that spend time “recognizing” business leaders for their various accomplishments. One assumes are great for company publicity, I suppose, but how effective are they?

I’ve been preparing my talk on Systematic Biases and the Software Developer for PyTennnessee and I ran into research that would appear to be relevent.

Ulrike Malmendier and Geoffrey Tate wrote a paper titled Superstar CEOs. The following quote was included in Thinking, Fast and Slow.

“We find that firms with award-winning CEOs subsequently underperform, in terms both of stock and operating performance. At the same time, CEO compensation increases, CEOs spend more time on activities outside the company such as writing books and sitting on outside boards, and they are more likely to engage in earnings management.”

I was amused to find many of the award nomination forms I’ve seen include several questions about which boards CEOs sit on.