Bad CEO leadership causes companies to fail, according to new GSU study

When big companies hit the skids, their leaders often point the finger at something – or someone – other than themselves.

But the reality is bad leadership can push distressed companies over the edge, causing them to fail, while excellent leaders can help lift troubled companies faster from problems such as regulatory scrutiny, according to a new study co-authored by a Georgia State business professor.

“CEOs often play the blame game and say that things are beyond their control,” said Martin Grace, professor and associate director of the Center for Risk Management and Research in the J. Mack Robinson College of Business at Georgia State University.

He added, “But great CEOs are more efficient and when under scrutiny, they can influence a company, lowering the probability of a company failing.”

In the report, “Dupes or Incompetents: An examination of management’s impact on firm distress,” Grace and co-author Tyler Leverty of the University of Iowa, tracked 12,000 insurance companies because that industry is in the business of taking on risk, and distress is relatively frequent and severe, even in good economic times. It’s also a great laboratory because industry CEOs frequently move around.

The study looked at such factors as company performance during financial distress and how well the CEO was able to marshal a firm’s resources efficiently and move it away from regulatory scrutiny or potential failure.

Researchers found excellent CEOs were able to remove their firms from regulatory scrutiny eight to 16 times faster than poor leaders. In insurance companies going out of business, a more talented CEO showed a better return on the firm’s assets by up to 10 cents on the dollar.

The study looked at performance of companies between 1989 and 2000. The majority of the data for the study came from the 1989 to 2000 National Association of Insurance Commissioners Property-Casualty (NAIC) annual statement database. Other data is from the A.M. Best Company’s “Key Rating Guide,” and the U.S. Bureau of Labor Statistics.

-----
Community News You Can Use
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter:  @GAFrontPage

UPS Joins EPA’s ''Climate Leaders'' Program

(BUSINESS WIRE)--As part of its continued commitment to sustainable business practices, UPS (NYSE:UPS) today announced its participation in the U.S. Environmental Protection Agency’s Climate Leaders program.

UPS is the first shipping company to join the program.

Climate Leaders is an industry/government partnership that works with companies to develop comprehensive climate change strategies. Partner companies commit to reducing their impact on the global environment by completing a corporate-wide inventory of greenhouse gas emissions, setting aggressive reduction goals and annually reporting their progress to the EPA.

“Our decision to join the Climate Leaders program is just the latest demonstration of a long commitment by UPS to operating in an environmentally responsible way,” said Scott Davis, UPS chairman and CEO. “UPS has been investing in more efficient technologies for more than 80 years and already leads the industry in fuel and energy conservation.”

Over the past few years, Davis noted, UPS has:

* Operated the largest private fleet of alternative fuel vehicles in the transportation industry and in 2008, purchased 500 additional hybrid electric (HEV) and compressed natural gas (CNG) vehicles.
* Optimized its delivery routes using technology to minimize left-hand turns, saving the company 3 million gallons of fuels in 2007.
* Minimized fuel use in airline operations by reducing the number of engines used during taxiing and deploying a new flight planning system to calculate the most efficient routes based on weather, terrain, winds and other factors.

“EPA applauds our corporate partners who are reducing their climate footprints in cost-effective ways,” said EPA Administrator Stephen L. Johnson. “Not only is UPS contributing to this country’s energy independence, UPS is proving that businesses can save green by going green.”

UPS has been a long-time partner of many voluntary programs sponsored by the EPA. These include a charter partner of the SmartWay Transport Partnership program in 2003, the Green Power Partnership, Waste Wise and the Energy Star program. Later this week, UPS will receive the EPA’s SmartWay Environmental Excellence Award for its leadership in conserving energy and lowering greenhouse gas emissions.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page