No More Bench Strength - New York Times

The NY Times missed a great opportunity here. The article is good, but it could have been great. First the facts from the article.

No More Bench Strength - New York Times: "

Thirty years ago, companies rarely looked beyond their own executives to find new chiefs, said Kevin J. Murphy, a professor of finance at the Marshall School of Business at the University of Southern California. In the 1970s, only 10 percent of new chiefs at Standard & Poor’s 500 companies came from the outside, he said. Now that figure is closer to a third."

Which in and of itself is a nice bit of trivia. Unfortunately, the article did not mention a great academic article by Hermalin that gives much insight into this phenomenon and hypothesizes that real option analysis and closer board governance can help explain why outsiders are now more apt to replace the CEO than in the past.

Close circuit to those of you at USC: if you get a chance, take a class from Kevin Murphy. He ranks VERY high in my all time favorites!


Here is a follow up via NPR.