Faculty & Research
Paul M. Healy

Paul M. Healy

James R. Williston Professor of Business Administration

James R. Williston Professor of Business Administration

Accounting and Management
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Paul M. Healy
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Featured Work Publications Research Summary Teaching Awards & Honors

Paul Healy is the James R. Williston Professor at the Harvard Business School. His research covers a broad range of topics, including white collar crime, governance, business ethics, financial analysis, and Wall Street research. He joined the HBS faculty in 1998, after fourteen years on the faculty at the M.I.T. Sloan School of Management, where he received awards for teaching excellence in 1991, 1992, and 1997. He received accounting and finance degrees from Victoria University in New Zealand (1976 and 1977) and a Ph.D. from the University of Rochester (1981). He has published widely in the leading academic and practitioner journals, has received numerous research rewards, and is the co-author of one of the leading financial analysis textbooks. He has taught MBA and executive courses on accounting, financial analysis, corporate boards, and ethical leadership.


Featured Work
Personal Relationships and Enforcement of Management Controls: An Analysis of Punishments for Perpetrators of Economic Crimes
To explore how companies enforce management control systems, we examine whether social relationships influence the severity and consistency of punishments for main perpetrators of corporate economic crimes. We find wide variation in rates of dismissal and prosecution of the main perpetrators, and that punishment rates are lower for senior management than for middle managers and junior staff. The negative relation between seniority and punishment severity, however, holds only for senior male perpetrators, who receive more lenient punishments than senior female perpetrators or more junior perpetrators controlling for the type and economic magnitude of the crime. These findings are more pronounced in organizations that operate in countries with more gender inequality, have less frequent updates to internal controls, do not report the crime to regulators, and do not disclose their identity in the survey. We interpret these findings as evidence that the main perpetrators’ personal connections with punishment decision-makers influence the severity of their punishments and the consistency with which management control systems are enforced.  
Directors’ Perceptions of Board Effectiveness and Internal Operations
We contribute to the growing literature on the effectiveness of corporate boards by examining the effect of two insights that have been largely unexplored in prior studies that use public data. First, since boards’ responsibilities are wide-ranging, more holistic performance measures may better capture the full range of their duties than specific public actions. And second, because corporate boards share many characteristics of other types of teams, their effectiveness is likely to be influenced by their internal operations. To examine the performance effects of these insights, we use data from 577 directors of U.S. public firms that responded to a survey we conducted in 2015-2016 and qualitative data from interviews of 75 directors. Our study establishes a strong relation between director perceptions of board performance effectiveness and internal board operations. Further, by highlighting the critical role of internal operations, identifying areas of relative strength and weakness in boards’ effectiveness in various activities, and probing director perceptions of their primary responsibilities, we are able to offer concrete suggestions for future research on board effectiveness.
Causes and Consequences of Firm Disclosures of Anticorruption Efforts
Multinationals frequently operate in locations where laws against corruption are not widely enforced. We examine ratings of self-reported anticorruption efforts for 480 multinationals to better understand what factors underlie their efforts and their performance consequences. Not surprisingly, country and industry corruption risks, as well as regulatory enforcement and monitoring, are important drivers of firms' anti-corruption efforts. Performance tests suggest that firms' decisions on how to manage corruption risk are as much ethical as economic.
Co-authored by George Serafeim
Fighting Corruption at Siemens

On November 15, 2006, German prosecutors raided offices and homes of Siemens AG staff as part of an ongoing investigation into bribery. The subsequent investigations covered business representing 60% of Siemens' revenues and spanned operations in Asia, Africa, Europe, the Middle East, and the Americas. Through interviews with key Siemens executives and supporting internal materials, this multimedia case takes a look at how one of the world's largest companies faced corruption head-on.

Books
Journal Articles
Book Chapters
Working Papers
  • Cheng, J. Yo-Jud, Boris Groysberg, and Paul M. Healy. "Recipe for Succession: An Analysis of Board-Level Drivers of CEO Succession Planning." Working Paper, September 2019. (Revise and Resubmit at Strategic Management Journal.) View Details
  • Cheng, J. Yo-Jud, Boris Groysberg, Paul M. Healy, and Rajesh Vijayaraghavan. "Directors' Perceptions of Board Effectiveness and Internal Operations." Working Paper, February 2020. (Under revision at Management Science.) View Details
  • Healy, Paul, and George Serafeim. "Who Pays for White-Collar Crime?" Harvard Business School Working Paper, No. 16-148, June 2016. View Details
Cases and Teaching Materials
Research Summary
Overview
My current research examines the role that boards of directors and senior management play in governing an organization. My interests focus on two areas. First, I examine factors that increase the effectiveness of board governance. And second, I explore how leadership and internal governance systems promote and support integrity within an organization. In earlier work in my career I have examined the management and effectiveness of investment research, company disclosure decisions, and mergers and acquisitions.
Board Governance
I examine how the internal operations of boards, including how they select new directors, how they interact with each other and the CEO, and how they review their performance, affect their governance effectiveness
Keywords: Board Of Directors
Corruption

World Bank estimates indicate that as much as $1 trillion is paid in bribes throughout the world in a given year. Corruption has been shown to slow economic development. My research focuses on how corruption affects multinational companies. It discusses differences in companies’ commitments to fighting corruption and their implications for performance, as well as providing greater understanding for how companies become involved in corruption and the consequences of getting caught.

Keywords: Corruption; Internal Governance
Wall Street Research

Wall Street research helps to support a well-functioning capital market by providing investors with information about investment opportunities, and corporate issuers with liquidity for their stocks. Yet surprisingly little is known about how Wall Street research actually works. Academic research has focused on analysts' earnings forecasts and stock recommendations, although investors appear to put little stock in this summary data. Regulators have focused on concerns about analysts' conflicts of interest that diminish the quality and integrity of analyst research. My research provides greater insights into how analysts perform their role as information intermediaries, how they are managed and rewarded, and how they really perform.

Keywords: Sell-side Analysts; Brokerage; Investment Banking; Buy-side Analysts; Compensation; Financial Services Industry
Teaching
Financial Reporting and Control
Throughout their careers, business leaders are required to measure and evaluate their organization's economic performance, improve resource allocation and strategy implementation within their organizations, and build accountability for performance through effective external and internal governance. Top leadership in most organizations must also communicate performance information to external investors and other capital providers to ensure that their organizations are able to access capital on favorable terms. This course provides students with key concepts and frameworks that guide the effective design and use of performance measurement systems to accomplish these multiple complex goals.
Related Link: https://inside.hbs.edu/Departments/mba/academics/courses/Pages/rc_term_i.aspx
Leadership and Corporate Accountability
This course focuses on the responsibilities of companies, their leaders, and their boards. Its aim is to deepend students' understanding of the economic, legal, and ethical dimensions of these responsibilities and to provide practical guidance on driving performance that delivers on all three dimensions. These situations have the potential to define, for good and bad, the careers of executives involved, and to determine the sustainability of their firms. Through a series of difficult dilemmas set in different regions of the world, the course builds a framework for decision-making and explores the elements of effective governance.
Related Link: http://www.exed.hbs.edu/assets/Pages/video.aspx?videoid=1227
Women on Boards
The program helps women who aspire to be board directors to develop the tools and experience needed to become effective directors.
Audit Committees in a New Era of Governance
The last ten years has heightened demands on audit committees. Not only are they responsible for overseeing internal and external audits to ensure that investors receive accurate and transparent information, but they must ensure compliance with new accounting and regulatory rules and standards. This intensive program prepares audit committee members and chief financial officers to operate effectively in this new environment.
Related Link: http://www.exed.hbs.edu/programs/ac/Pages/default.aspx
Awards & Honors
Awarded an Honorary Doctorate from Victoria University in 2020.
Awarded an Honorary Doctorate in 2013 by the University of Turku (Turun yliopisto) in Finland.
Winner of the second place 2013 Hermes Fund Managers' Best Paper Prize for the paper "Causes and Consequences of Firm Disclosures of Anticorruption Efforts" (with George Serafeim, Harvard Business School Working Paper, No. 12–077, 2012).
Honored in 2013 as a Fellow of the New Zealand Institute of Chartered Accountants for outstanding contributions to the profession of accountancy.
Winner of the 2006 Emerald Management Reviews Citation of Excellence for "Which Types of Analyst Firms Are More Optimistic?" (with Amanda Paige Cowen and Boris Groysberg, Journal of Accounting & Economics, April 2006).
Winner of the 2001 All Star Paper Award from the Journal of Financial Economics for "Does Corporate Performance Improve after Mergers?" (April 1992) with Krishna G. Palepu and Richard S. Ruback.
Business Analysis and Valuation Using Financial Statements (South-Western College Publishing, 1996), with Victor L. Bernard and Krishna G. Palepu, won the 1999 American Accounting Association Notable Contributions to Accounting Literature Award.
Recipient of the MIT Sloan School of Management Outstanding Teacher Award in 1997. Also a recipient of this award in 1991 and 1992.
Business Analysis and Valuation Using Financial Statements (South-Western College Publishing, 1996), with Victor L. Bernard and Krishna G. Palepu, won the 1997 Wildman Medal from the American Accounting Association.
Winner of the 1990 American Accounting Association Notable Contribution Award for the article "The Effect of Bonus Schemes on Accounting Decisions" (Journal of Accounting & Economics, April 1985).
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