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There was a Danish study that showed that a death in the family of a Danish CEO led, on average, to a 9 percent decline in the profitability of the corporation.

There was a Danish study that showed that a death in the family of a Danish CEO led, on average, to a 9 percent decline in the profitability of the corporation. If it was the death of a spouse, the decline was 15 percent and, if it was a child who died, 21 percent. From the study: “Interestingly, similar deaths experienced by individual members of the board of directors do not significantly affect firms’ outcomes. Our results provide strong empirical support for the idea that CEOs are extremely important to firm performance.” So I’d say they add significant value. https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/3177/valueceos.pdf https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfile...

ForHackernews 5y ago
Technically, doesn't this study only demonstrate that a distracted CEO is a risk to firm performance? Sounds like all the more reason to replace them with robots that don't have families.
- skystarman 5y ago
  My Amazon Alexa has like a 60% success rate when I ask it basic questions that take me 10 seconds to google on my phone. Something tells me AI isn't quite there yet to run multi-billion dollar firms and won't be for a while.
makapuf 5y ago
To be honest, this shows that a dysfunctional CEO (for completely understandable reasons) leads to a nonprofitable firm, not that value is added. You could say that people with no or defective keyboard have a hard time programming, but the best keyboard does not add significant value to a developer.
- rybosworld 5y ago
  Agreed. If anything, this study makes the case that one person with sweeping decision power is at best a liability.
  - koonsolo 5y ago
    In that case, take away the CEO and see what happens. It can't be that hard. You don't know any companies without CEO's? Exactly!
    - rybosworld 5y ago
      A famous one is DPR Construction: https://www.dpr.com/media/blog/wsj-ceo https://www.dpr.com/media/blog/wsj-ceo They have 3 people (the co-founders) sharing the role/responsibilities of CEO.
      - koonsolo 5y ago
        Strange reasoning: "Show me a person without a car". "Here you go, this person has 3". So 3 founders are running the company, nothing special about that. Please show me a company without a CEO.
        gtyras2mrs 5y ago
        Doesn't seem like 'strange reasoning' at all. Since the comment was like 'having only 1 driver is likely to be a liability', to which you responded 'show me a vehicle with no drivers' and you got a response saying 'this vehicle has 3 drivers' The strange reasoning is taking the the statement that said "just one driver could be a liability" and asking for vehicles with no drivers.
        rybosworld 5y ago
        Not to mention the person you are replying to edited their comment after the fact (possibly as I was replying). It originally said something to the effect of "show me a company without a CEO". Which I think is significant, as I took "A" to mean "singular".
    - makapuf 5y ago
      Let me take away your keyboard and let's see how you fare at c++ or Javascript.
- 2OEH8eoCRo0 5y ago
  Isn't the assumption here that if they didn't provide any value then a death in their family shouldn't affect the company?
  - CRConrad 5y ago
    Seems like an illogical assumption. What it shows is just that having a dysfunctional (again, quite understandable in this case!) CEO can subtract value, which is not the same as an ordinary one adding any. Maybe Tom Hanks's pal Mr Wilson would work just as well as all the other ones.
- koonsolo 5y ago
  I like the keyboard analogy, because you won't notice a good or great CEO, but will notice a bad one. The only thing that you didn't consider is in CEO or management world, most keyboards are broken, and only a few work decent enough to do proper programming. That's why they are so valuable.
majormajor 5y ago
That demonstrates that a CEO can definitely affect results, but what's the baseline? Would the "null CEO" script robot produce the same value as the non-grieving CEO, or the same value as the grieving one?
- Invictus0 5y ago
  If Amazon didn't have Jeff Bezos, it would probably still be a bookstore today.
nrmitchi 5y ago
It sounds like that only shows that they have the ability to cause a negative impact, not that they add significant value the rest of the time.
rightbyte 5y ago
There is probably a bias in that study for small companies, where the CEO do grunt work.
dfxm12 5y ago
This more likely shows poor planning (by the CEO). If your firm is so reliant on one person, even if it is the CEO, it is poorly run. I believe it is a function of a CEO to enact that type of strategy, whether it be succession planning, proper delegation, identifying backups, instilling self reliance, etc. This probably shows some perverse incentives. A CEO can clearly prove their worth by otherwise sabotaging the firm when they're out.
anigbrowl 5y ago
Conversely, you could infer that board members are largely decorative, and of course any effect would be a) inversely proportional to the # of board members, b) proportional to the small time commitments that directorships typically involve, and c) mitigated by the fact that board members are/have somewhat supportive peers whereas the CEO does not. It's an interesting data point but the conclusion seems overbroad. One might equally draw on this conclusion to say that families of regular people probably need proportional levels of economic support following the death of a family member.

ForHackernews 5y ago

Technically, doesn't this study only demonstrate that a distracted CEO is a risk to firm performance? Sounds like all the more reason to replace them with robots that don't have families.

skystarman 5y ago
My Amazon Alexa has like a 60% success rate when I ask it basic questions that take me 10 seconds to google on my phone. Something tells me AI isn't quite there yet to run multi-billion dollar firms and won't be for a while.

makapuf 5y ago

To be honest, this shows that a dysfunctional CEO (for completely understandable reasons) leads to a nonprofitable firm, not that value is added. You could say that people with no or defective keyboard have a hard time programming, but the best keyboard does not add significant value to a developer.

rybosworld 5y ago
Agreed. If anything, this study makes the case that one person with sweeping decision power is at best a liability.
- koonsolo 5y ago
  In that case, take away the CEO and see what happens. It can't be that hard. You don't know any companies without CEO's? Exactly!
  - rybosworld 5y ago
    A famous one is DPR Construction: https://www.dpr.com/media/blog/wsj-ceo https://www.dpr.com/media/blog/wsj-ceo They have 3 people (the co-founders) sharing the role/responsibilities of CEO.
    - koonsolo 5y ago
      Strange reasoning: "Show me a person without a car". "Here you go, this person has 3". So 3 founders are running the company, nothing special about that. Please show me a company without a CEO.
      - gtyras2mrs 5y ago
        Doesn't seem like 'strange reasoning' at all. Since the comment was like 'having only 1 driver is likely to be a liability', to which you responded 'show me a vehicle with no drivers' and you got a response saying 'this vehicle has 3 drivers' The strange reasoning is taking the the statement that said "just one driver could be a liability" and asking for vehicles with no drivers.
        rybosworld 5y ago
        Not to mention the person you are replying to edited their comment after the fact (possibly as I was replying). It originally said something to the effect of "show me a company without a CEO". Which I think is significant, as I took "A" to mean "singular".
  - makapuf 5y ago
    Let me take away your keyboard and let's see how you fare at c++ or Javascript.
2OEH8eoCRo0 5y ago
Isn't the assumption here that if they didn't provide any value then a death in their family shouldn't affect the company?
- CRConrad 5y ago
  Seems like an illogical assumption. What it shows is just that having a dysfunctional (again, quite understandable in this case!) CEO can subtract value, which is not the same as an ordinary one adding any. Maybe Tom Hanks's pal Mr Wilson would work just as well as all the other ones.
koonsolo 5y ago
I like the keyboard analogy, because you won't notice a good or great CEO, but will notice a bad one. The only thing that you didn't consider is in CEO or management world, most keyboards are broken, and only a few work decent enough to do proper programming. That's why they are so valuable.

majormajor 5y ago

That demonstrates that a CEO can definitely affect results, but what's the baseline? Would the "null CEO" script robot produce the same value as the non-grieving CEO, or the same value as the grieving one?

Invictus0 5y ago
If Amazon didn't have Jeff Bezos, it would probably still be a bookstore today.

nrmitchi 5y ago

It sounds like that only shows that they have the ability to cause a negative impact, not that they add significant value the rest of the time.

rightbyte 5y ago

There is probably a bias in that study for small companies, where the CEO do grunt work.

dfxm12 5y ago

This more likely shows poor planning (by the CEO). If your firm is so reliant on one person, even if it is the CEO, it is poorly run. I believe it is a function of a CEO to enact that type of strategy, whether it be succession planning, proper delegation, identifying backups, instilling self reliance, etc. This probably shows some perverse incentives. A CEO can clearly prove their worth by otherwise sabotaging the firm when they're out.

anigbrowl 5y ago

Conversely, you could infer that board members are largely decorative, and of course any effect would be a) inversely proportional to the # of board members, b) proportional to the small time commitments that directorships typically involve, and c) mitigated by the fact that board members are/have somewhat supportive peers whereas the CEO does not. It's an interesting data point but the conclusion seems overbroad. One might equally draw on this conclusion to say that families of regular people probably need proportional levels of economic support following the death of a family member.