Steve Jobs, the founder and former CEO of Apple, died this morning. He has rightly been described as a visionary and genius. Apple is one of the world's largest and most profitable corporations thanks to Steve Jobs. This raises a whole bunch of questions of interest to economists. First, are public companies which are run by their founders more successful than those run by professional managers? Second, how do public companies address succession issues whenever a founder CEO steps down? Third, how can an economy encourage innovation and innovators? For an interesting view on this from an historical perspective, see this recent paper by Tom Nicholas and others.
Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...