Originally published in Carroll Capital, the print publication of the Carroll School of Management at Boston College. .Ìę
Published in top academic journals, Carroll School professors keep bringing original research to peers in their disciplinesâand to students in their classrooms. Over the past year theyâve illuminated facts about lagging CEO performance, employee satisfaction, and even long waits for inpatient care, among many other questions. Hereâs a sampling.
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Do Remote CEOs Slack Off?Ìę
Yachts donât normally explain executive performance, but Ran Duchin, the Coughlin Family Professor in the Seidner Department of Finance, believes they may factor into some CEOsâ decisions to work remotely. In The Review of Financial Studies, Duchin and a colleague find that the performance of firms with remote CEOs suffers. In investigating why, CEOsâ indulgence in leisure seemed one explanation: Companies with CEOs who live in a beach house or own a yacht underperformed peers. Other likely contributors to the lagging performance wereÌęâshort-termismââremote CEOs are less committedâand a weaker ability to acquire internal information, the researchers say. Luckily, these problems have aÌę simple solution. âWhenÌę the same CEO ends a remote arrangement and moves to the headquarters during a continuous employment spell, their firmâsÌę operating performanceÌę and valuation increase,âÌę said the researchers, who gleaned their data from real estate ownership records and other public sources.
People Are Better Paid Than They Think
Mandated disclosure of the CEO pay ratioâthe gap between the CEOâs total compensation and that of the median employeeâwas intended to help investors evaluate executives. In an article in Management Science, Mary Ellen Carter, a professor and the Joseph L. Sweeney Chair in Accounting,Ìęand colleagues find the disclosure had an unexpected benefit: It made employees happier with their paychecks. Since 2018, public companies have had to disclose their ratios. Before that, most workers didnât know what colleagues earned. The researchers discovered that, after median pay was published as part of pay ratios, employeesâ satisfaction with their own pay increased. Why? Many people overestimate what peers earn. When the data showed median pay was lower than they expected, they realized their salaries were better than they thought. âDisclosing the median employee pay level may have provided employees with a new benchmark,â the researchers write.
Corporate Strategy Lags AI AdvancesÌę
Agentic AI, which can plan and execute tasks, complicates corporate thinking, as itâs both an asset you own and a helper you collaborate with. Sam Ransbotham, a professor of business analytics and Peter F. Drucker Chair, and colleagues write in MIT Sloan Management Review that this dual natureâmachine and mindâhas created a rising risk for companies: âAgentic AI is spreading across enterprises faster than leaders can redesign processes, assign decision rights, or rethink workforce models.âÌęTo better use agentic AI, companies need to reconsider their workflows, update their governance, and rethink their organizational structures, the scholars say. In an AI-forward firm, managers will oversee hybrid teams of humans and bots. That will require upskilling humans and creating an âHR for AIâ that can train, evaluate, and even fire automated helpers. âThe challenge of agentic AI is organizational, not technological,â the researchers write. âMany organizations are adopting this technology at a breakneck pace, often before they have a coherent strategy in place.â
Delivering Results While Avoiding Overwork
ÌęA group of IT professionals studied by Vanessa Conzon, assistant professor of management and organization, has found a way to resist overwork pressures. In a paper published in Organization Science, Conzon and a colleague call the software developersâ approach âconcerted quantification.â The researchers explain that the developers first assigned points to tasks based on how long theyâd take. They then persuaded clients to assess their output using those points rather than face time at the clientâs office. âThis establishes completion of these [points]ârather than, for instance, long work hours or an indeterminate number of tasksâas a key criterion of success,â the researchers explain. By arranging their work this way, the developers avoided overwork while still satisfying clients. It helped that the developers could structure their workflows and were seen as experts in their field.
Shamed Insurers Shed Dirty BondsÌę
Public shaming worked for the Puritans. DJ Stockbridge, assistant professor of accounting, and colleagues show it still works today. In an article in theÌęJournal of Accounting and Economics, the professors find that a 2016 California law requiring insurers to list their fossil- fuel holdings on a public website helped induce them to change their investments. The aim was to inform external stakeholders, who might then push firms to opt for greener investments. That worked: On average, disclosing insurers cut theirÌę fossil-fuel bond holdings by about 20 percent compared to nondisclosers, prompted by pressure from stakeholders such as environmental groups. Larger, more visible companies were more likely to shift their holdings. The researchers conclude the changes are likely permanent. After the mandate ended in 2019, most companies didnât revert. Instead, they updated their longterm investment policies to shun âdirtyâ holdings.
Startups Are Scarcer But StrongerÌę
Simcha Barkai, assistant professor in the Seidner Department of Finance, noticed something odd: Labor economists were fretting about fewer startups even as venture capitalists were thriving. VCs invest in startups, so something seemed amiss. His insight led to research published in the Journal of Finance in which Barkai and a colleague show that the number of startups and the jobs theyâre creating have, in fact, declined. But that doesnât mean their overall economic contribution has waned. Startupsâ wealth creation, measured via stock market capitalization, and sales keep chugging along, the researchers find. So fewer young, high-growth firms exist, but theyâre sturdier. âRecent cohorts of new firms are not necessarily âweakerâ than their predecessors but rather different in terms of how their revenue and employment relate to eachÌęother,â they write. Barkai and his colleague argue that todayâs startups have a greater ability to mark up prices, so each has more economic heft.Ìę
Better Scheduling Helps Patients and ProfitsÌę
Nan Liu, the William S. McKiernan â78 Family Faculty Fellow and a professor of business analytics, and colleagues have developed a more efficient way for hospitals to use their diagnostic technologies, like CT scanners, while improving inpatient care. In an article in Manufacturing & Service Operations Management, they introduce a scheduling approach they call âadvance notice,â which âstrikes a fine balance between the two classic scheduling paradigmsââreducing patient waiting and giving providers flexibility in using their service capacity. Traditionally, hospital diagnostic services have served emergency admissions first, outpatients next, and then, whenever capacity became available, inpatients. This often ledÌę to frustrating delays for inpatients and their care- givers. The proposed approach gives inpatients advance notice to prepare for testing and a guaranteed service-time window.
