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• Article | Journal of Financial Economics | March 2020

  Governance Through Shame and Aspiration: Index Creation and Corporate Behavior

  Akash Chattopadhyay, Matthew D. Shaffer and Charles C.Y. Wang

  After decades of deprioritizing shareholders' economic interests and low corporate profitability, Japan introduced the JPX-Nikkei400 in 2014. The index highlighted the country's "best-run" companies by annually selecting the 400 most profitable of its large and liquid firms. We find that managers competed for inclusion in the index by significantly increasing ROE, and they did so at least in part due to their reputational or status concerns. The ROE increase was predominantly driven by improvements in margins, which were in turn partially driven by cutting R&D intensity. Our findings suggest that indexes can affect managerial behavior through reputational or status incentives.

  Keywords: JPX-Nikkei 400 index; Status incentives; return on equity; capital efficiency; Social Norms; Index inclusion; Reputation incentives; Motivation and Incentives; Corporate Governance; Behavior; Investment Return; Status and Position; Japan;

  Citation:

  Chattopadhyay, Akash, Matthew D. Shaffer, and Charles C.Y. Wang. "Governance Through Shame and Aspiration: Index Creation and Corporate Behavior." Journal of Financial Economics 135, no. 3 (March 2020): 704–724.  View Details

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• Case | HBS Case Collection | February 2020

  Leading Change in Talent at L'Oréal

  Lakshmi Ramarajan, Vincent Marie Dessain and Emer Moloney

  Jean-Claude Le Grand had dedicated almost his entire career to following talent at L'Oréal. He strongly believed that L'Oréal's workforce needed to be diverse in order to ensure creativity and innovation. In early 2018—as he was about to take up the position of EVP for Human Relations and a place on the Executive Committee—L'Oréal still struggled to diversify its senior leadership team, which was often male, French, elite-educated and made up of executives who had spent their entire careers at the company. At the same time, in an increasingly competitive market for talent, and given digitalization and new ways of working Le Grand was preoccupied that L'Oréal would no longer be able to attract vibrant young talent.

  Keywords: Advertising; Business Headquarters; Business Divisions; Business Organization; Change; Change Management; Transformation; Competency and Skills; Experience and Expertise; Talent and Talent Management; Demographics; Diversity; Gender; Nationality; Multinational Firms and Management; Human Resources; Employees; Recruitment; Retention; Selection and Staffing; Innovation and Management; Jobs and Positions; Employment; Human Capital; Leadership; Leadership Development; Leadership Style; Leading Change; Management Practices and Processes; Marketing; Brands and Branding; Product Marketing; Organizations; Organizational Change and Adaptation; Organizational Structure; Personal Development and Career; Planning; Strategic Planning; Problems and Challenges; Networks; Social Psychology; Attitudes; Power and Influence; Social and Collaborative Networks; Business Strategy; Advertising Industry; Beauty and Cosmetics Industry; Consumer Products Industry; France; Paris;

  Citation:

  Ramarajan, Lakshmi, Vincent Marie Dessain, and Emer Moloney. "Leading Change in Talent at L'Oréal." Harvard Business School Case 420-106, February 2020.  View Details

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• Case | HBS Case Collection | February 2020

  Fake News at DER SPIEGEL (A)

  Aiyesha Dey, Jonas Heese and Tonia Labruyere

  The case discusses the strategy of DER SPIEGEL, the leading news magazine in Germany, in the aftermath of the discovery of a fake reporting scandal. It had come to light that one of DER SPIEGEL’s own reporters had falsified and made up entire articles for years, despite DER SPIEGEL’s large fact-checking departments. New editor-in-chief Steffen Klusmann and an internal investigation commission had set to work to discover the problems within DER SPIEGEL that made this failure possible and had come up with a series of recommendations for improvement. At the heart of the investigation was the question whether the scandal was the result of one bad apple or whether DER SPIEGEL had systematic failures in its control systems.

  Keywords: scandal; Management Control Systems; Corporate Governance; Crisis Management; Communication Strategy; Journalism and News Industry; Germany;

  Citation:

  Dey, Aiyesha, Jonas Heese, and Tonia Labruyere. "Fake News at DER SPIEGEL (A)." Harvard Business School Case 120-001, February 2020.  View Details

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