Literature Review Women on boards and in TMTS and firm performance 151 indicates and will foster overconfidence Moreover heightened acquisitiveness in conjunction with lar ge amounts of paid goodwill can be observed The paid premiums are at least partly attributable to valuation errors and hubris on the part of the bid der Rueter was presumably overly optimistic about potential synergies and overestimated increases in value This is supported by the fact that the ma jority of CONERGY s at the height of expansion 83 subsidiaries both acquired and founded was eit her discontinued divested or liquidated after the company s crisis year of 2007 Adjustments on goodwill amounted to EUR 21 8 million in 2007 which equals roughly two thirds of total goodwill accumulated since 2004 In addition there are several promoting factors for optimism and overconfidence The state funded boom of the German and European solar sector in the first decade of the new millennium led to very successful years for CONERGY It is most likely that Rueter himself claimed full credit for the or ganizational successes and it was also credited to him externally for instance by research analysts This attribution encourages CEO overconfidence and inter organizational prestige A very important source of overconfidence ho wever is weak board vigilance The supervisory board has the decisive duty to monitor and con trol management s actions It should be aware of the potentially serious risks of extreme managerial overconfidence and it must exercise control The supervisory board with Rueter s uncle being Chair man and his brother being a board member did not effectively constrain the CEO s excessive expan sion Four major effects of this expansion in combi nation caused CONERGY s existential crisis in 2007 and 2008 First personnel and infrastructure costs rose rapidly due to the newly founded subsidiaries as well as poorly targeted acquisitions Second the growing complexity on the organizational level as well as on the technology and product level beca me hardly manageable Third increasing cash re quirements and poor working capital management caused precarious shortfalls in liquidity nearly re sulting in insolvency Finally CONERGY failed re peatedly in procurement CONERGY did not recover from the crisis and filed for insolvency in 2013 Section 5 provides an analysis of the wealth ef fects of layoff decisions by banks Large scale lay offs are personnel measures that are executed pro actively or reactively for various reasons The effect on stock prices and thus on the shareholders equi ty is examined by applying event study metho dology to a sample of 210 layoff announcements issued by banks in Western Europe and the United States between 2004 and 2014 Results refute the thesis of a stakeholder conflict in which several stakeholders are affected but only shareholders benefit from the staff cuts at the expense of em ployees Capital markets on the whole respond to layoff announcements with significant negative abnormal returns in event windows up to eleven days around the announcement date supporting the declining investment opportunities hypothe sis From the capital markets perspective the announcements of planned redundancies convey negative information about a bank s current status and also its future prospects including poor inves tment or growth opportunities or uncertain future cash flows Banks belong to the financial services industry their employees are their key source of earnings and their main links to the customers Capital markets appear to realize and assess the risk associated with the loss of human capital The detriments associated with the mass layoffs hence weigh more heavily compared with the potenti al benefits from cost savings Solely dismissals of employees from the investment banking division Concluding remarks

Vorschau DIRK-Forschungsreihe Band 21 Workforce diversity and personal policies Seite 151
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