james ang florida state university. the unintended consequences of high expectations james ang and...

James AngFlorida State University

The Unintended Consequences of High Expectations

James Ang and Kevin Krieger Florida State University and Tulsa

University  

Sources of Expectations on New CEOs

Labor market expectations or executives , or price (pay) for the CEOs.

Market expectations, or stock price response to announcement of CEOs’ appointments.

Firms’ previous record in fulfilling outside expectations,

Expectations of outside financial analysts.

Meeting expectations and earning manipulation

The Effect of Social Pressures on CEO Compensation

James Ang, Gregory Nagel, and Jun Yang Florida State University, Mississippi State

University, and Indiana University

CEO pay and the size of social circle

Average total pay versus number of golfing contacts

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Average total pay versus number of local CEOs

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Marketing Financial Securities, It’s all in the Name: The Case of Dual-Class Share IPO and Beyond

James Ang, Ansley Chua, and Danling JiangFlorida State Univerisity

Figure 2: Long-run post-IPO performance by voting rights and share class namesThis figure depicts the buy-and-hold abnormal returns (BHAR) of post-IPO dual-class shares by share voting rights and class names.

Pitching IPO:Exaggeration and the Marketing of Financial Securities

James Ang and S. Mckay PriceFlorida State University

Ho: µ = 1 Ho: µ = .5 Ha: µ ≠ 1 Ha: µ ≠ .5

Intro Section

MD&A Section

  P/N S/W A/P O/U  P/

(P+N)S/

(S+W)A/

(A+P)O/

(O+U)

µ 13.08*** 27.08*** 4.08*** 8.49*** 0.87*** 0.94*** 0.79*** 0.83***

σ 19.58 24.78 1.77 9.13 0.07 0.04 0.06 0.10

  P/N S/W A/P O/U  P/

(P+N)S/

(S+W)A/

(A+P)O/

(O+U)

µ 3.54*** 12.97*** 2.66*** 5.99*** 0.72*** 0.91*** 0.71*** 0.81***

σ 4.49 8.60 0.97 6.66 0.10 0.04 0.06 0.07*** p<0.01, ** p<0.05, * p<0.1

Ho: µS = µL

Ha: µS ≠ µL

Intro Section

*** p<0.01, ** p<0.05, * p<0.1

  P/N S/W A/P O/Upc ratio

 µS 13.99 28.19 4.13 8.97 0.09µL 8.50 22.83 3.99 7.07 -0.32

p value 0.0079*** 0.0473** 0.4771 0.0580* 0.0059***

P/(P+N)

S/(S+W)

A/(A+P)

O/(O+U)

pc percent

 µS 0.87 0.94 0.79 0.83 0.06µL 0.86 0.94 0.79 0.82 -0.27

p value 0.0219** 0.1593 0.8837 0.0780* 0.0200**

Small Offering < $100MLarge Offering ≥ $100M

Findings:CEOs are more likely to divest assets from non-

familiar segments relative to familiar segments.They exhibit this familiarity effect later in their

tenure.The relative bargaining power of segment

managers, in the form of political clout from size, segment and organizational knowledge, moderates CEOs’ familiarity bias.

The familiarity effect of longer-tenured CEOs can be costly to shareholders, because the highest abnormal returns are generated by longer-tenured CEOs who are willing to divest from their home-base segments.

Are Outside Hired CEOs Superior to Inside Hired?

James Ang and Gregory Nagel, Florida State University and Mississippi State University 

Two methods of comparisons:A. Same level playing fieldCompare CEOs in a one to one matching, with the

same initial endowment and hiring circumstances.Only new CEOs.Asset size, within +/- 30 percent of each other;Their industry-adjusted performance (defined

below) must be within +/- 20 percent of each other in the year before the CEO’s appointment;

Hiring in the same calendar year;Similar growth opportunities, as in Tobin’s Q.

2.   Appointment against type1) Severely underperforming hiring firm; 2) Hiring firms that appoint turnaround

specialists; 3) Hiring firms requiring major asset

restructuring; 4) Firms suffering an exodus of managers before

hiring; 5) Firms with no succession plan; and outside

candidates that are perceived to be of higher quality. These samples are CEOs:

6) Outside CEOs raided from another firm; 7) from firms with good performance record, 8) from larger firms, and from the same industry.

Applications involving culturesSocial Capital, Cultural Biases, and Foreign

Investment in High Tech Firms: Evidence from China

James Ang, Yingmei Cheng, and Chaopeng Wu*Florida State University and Xiamen University

Cultural Differences Between Acquirers and Targets

Cultures and Analysts’ Behavior.James Ang and Mary Anne MajadillasFlorida State University