The stock market has a measurable influence on how people who own shares vote — potentially a big one — according to a new study by finance experts at Rice University and the University of Pittsburgh.

The study, which compared electoral preferences with levels of dividend income, suggests that had stocks rallied instead of plunging in 2008, then-presidential candidate John McCain may have won key states like Florida and Ohio, said coauthor Alan Crane, associate professor of finance at Rice Business. He is available to discuss the study, a working paper, with the news media.

Crane and his coauthors don’t say equity returns determine elections, but there’s reason to think stock performance affects decisions at the margin, and in certain circumstances could turn the tide.

“The story is, if you’ve got a lot of money invested in the stock market, and the stock market has been going up, then you’re going to support that incumbent party, because that’s good for you personally,” Crane said. “You have an opportunity for politicians to cater through this particular channel.”

From an academic standpoint, there is a generally accepted principle: A good economy is good for the incumbent. “The problem is, it’s very hard to show,” said Crane, who wrote the paper with Pittsburgh professors Andrew Koch and Leming Lin. “What we’re trying to do in this paper is nail that down. Say, ‘Look, the stock market does have this causal effect going in that direction, and we can identify that.'”

Rice has a VideoLink ReadyCam TV interview studio. ReadyCam is capable of transmitting broadcast-quality standard-definition and high-definition video directly to all news media organizations around the world 24/7.

To schedule an interview with Crane, contact Jeff Falk, associate director of national media relations at Rice, at jfalk@rice.edu or 713-348-6775.

Follow the Jones Graduate School of Business on Twitter @Rice_Biz.

Follow Rice News and Media Relations on Twitter @RiceUNews.

Related materials:

Study: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3460209

Crane bio: https://business.rice.edu/person/alan-crane

Jones Graduate School of Business: https://business.rice.edu

A Texas-wide initiative will bring 150 school district and campus leaders to Rice’s Jones Graduate School of Business for one weekend every month between now and March to advance the administrators’ and educators’ leadership skills. The Jones School is partnering with Leadership Partners and the Texas Education Agency to provide the programming for the Executive Education Academy. Collectively, the 33 districts represented in the program’s three cohorts serve 21% of the 5 million students in the state.

Brent Smith (pictured below), senior associate dean for executive education and associate professor of management and psychology at Rice Business, is one of the Rice faculty involved with the academy, and he taught a kickoff session on “Leading Self” Oct. 4 in McNair Hall.

(Photos by Jeff Fitlow)

A new study shows that two key factors can make freshly appointed CEOs more vulnerable and raise the odds they’ll get fired.

The job security of a new CEO tends to suffer when the stock market reacts badly or when the previous CEO stays on as board chair, according to the study by Rice University and Peking University management experts. But the study found that the new CEO can overcome these challenges with what researchers call “social influence behaviors.”

The study’s authors used computer programs to analyze transcripts of new CEOs’ conference calls with securities analysts. They found that CEOs who ingratiated themselves with their predecessors reduced the adverse impact of the old boss remaining as board chair. At the same time, the study concluded CEOs who engaged in self-promotion mitigated the negative impact of poor stock market reactions.

But the authors also found evidence that new CEOs’ social influence behaviors can backfire. “A new CEO’s commitment to strategic continuity — as originated by the predecessor CEO — can amplify the adverse impact of the initial negative stock market reaction,” the authors said. “Moreover, a new CEO’s self-centered expression may turn off the retained predecessor CEO, thus amplifying the adverse impact of the predecessor’s staying on as board chair on the new CEO’s early survival prospect.”

The study will be published in the Academy of Management Journal.

Yan “Anthea” Zhang, professor and the Fayez Sarofim Vanguard Chair of Strategic Management at Rice’s Jones Graduate School of Business, along with co-authors Xiwei Yi of Peking University’s Guanghua School of Management and Duane Windsor, the Lynette S. Autrey Professor of Management at Rice Business, focused their study on a sample of 440 successions that consisted of newly appointed CEOs in S&P 500 companies who took office between 2001 and 2012.

The language used by new CEOs in conference calls is public language, the authors said. “Public language is endemic to public corporations,” the authors wrote. “It is very difficult for a leader to communicate privately with one group while making contrasting statements publicly.”

“Taking charge is challenging for new CEOs,” they wrote. “Predecessor CEOs remaining as board chairs undermines the authority and discretion of the new CEOs. Negative stock market reactions reflect shareholders’ doubt about the new CEOs’ job fit.”

Social influence theory suggests that people can convey information in such a way as to manage relationships and influence the attitudes of others, the authors said.

“Ingratiation and self-promotion are two important social influence tactics,” the authors wrote. “Ingratiation focuses on a target individual with the aim of evoking interpersonal attraction by complimenting that individual or agreeing with that individual. Self-promotion focuses on highlighting one’s own experiences and accomplishments in order to generate a perception of competence. Both ingratiation and self-promotion can improve outcomes such as hiring recommendations, promotion and performance appraisal ratings.”

Both types of behaviors aim to improve a new CEO’s approval by the board of directors and shareholders, but they rely on different mechanisms, the authors said. Ingratiation increases perceptions of similarity and likability, while self-promotion elicits the attribution of competence.

“In brief, while new CEOs’ social influence behaviors may alleviate the adverse impact of targeted audiences, such behaviors may amplify the adverse impact of non-targeted audiences on their early survival prospects,” the authors wrote.

For a copy of the study, “You are Great and I am Great (too): Examining New CEOs’ Social Influence Behaviors During Leadership Transition,” email jfalk@rice.edu.

For more information about and insights from Rice Business faculty research, visit the school’s Rice Business Wisdom website, https://business.rice.edu/wisdom.

Follow Rice Business via Twitter @Rice_Biz.

Follow Rice News and Media Relations via Twitter @RiceUNews.

Related materials:

Windsor bio: https://business.rice.edu/person/duane-windsor

Zhang bio: https://business.rice.edu/person/yan-anthea-zhang

Updated from original post that was published in 2019.

Interview with Sofia Cormack, assistant director of recruiting and admissions at Rice Business

If you're planning on applying to Rice Business you're likely a high achiever – and showcasing all your qualifications to best effect, in one application, while meeting your other responsibilities, may seem daunting. Don't let it be: Sofia Cormack, assistant director of recruiting and admissions, outlines ten manageable steps to master the business school application process.

Step 1: Ask Questions

Before diving into the application process, take the time to thoroughly research business programs and gain a comprehensive understanding of the MBA application journey.

Here's a curated list of questions for MBA candidates to keep in mind:

• What do the alumni from a particular program go on to pursue after getting their degrees?
• What are the typical career paths after earning an MBA?
• What are your goals for an MBA?
• Why is a Rice MBA right for you?

Step 2: Start your online application.

Once you open your online application account, it will be a work in progress. Please check this page for up-to-date information on MBA application requirements. You'll be able to add to and edit it as much as you want in the days before submitting. Rice Business reviews applications comprehensively, which means that no one piece of your application carries more weight than any of the others. Instead, quantitative credentials – such as work experience, GMAT or GRE score and grades – will be assessed alongside qualitative achievements such as leadership, community involvement and career progress. This ensures a range of ways for you to show why you belong here. Keep in mind you don’t need to fill out the application all in one sitting; many successful candidates work on their application as a study break from their GMAT or GRE test preparation. 

Step 3: Choose Your Test

Determine if you want to take the GMAT, GRE or Executive Assessment (EA). All candidates, except ones for Deferred Enrollment, are eligible to take the EA. We don't have a preference for which test you take. However, some applicants tend to perform better on one of these tests than the other. You should research which type of test you do best on.

A few industries tend to prefer one test over the other. Depending on your career goals, you may want to choose a particular test. During the application process, please submit the official test score report.

Step 4: Gather Transcripts

Gather unofficial copies of your higher education transcripts. We advise doing this early on, because you may need to reach out to your former schools for these documents. The application process only requires unofficial copies, such as scans. For enrollment, you'll need to submit official copies.

Step 5: Choose Your Recommenders

Select your recommenders, and let them know they should expect an email from our admissions office. It will contain a link to the form for the GMAC Common Letter of Recommendation. We suggest having a conversation with your recommenders beforehand, explaining why you are interested in an MBA program. It can be helpful to remind your recommenders of a couple of projects you have worked on.

A maximum of two letters of recommendation are allowed. Only one is required if it comes from your current or previous supervisor. Two are required if your current or previous supervisor will not be submitting a recommendation on your behalf. Recommendations highlighting your professional abilities are preferred.

Step 6: Ready Your Resume 

Now it's time to prepare your resume. A tip for your Rice Business application is to follow a 70-10-20 rule. This means that about 70 percent of your resume should focus on your work experience, 10 percent should describe your education and 20 percent can inform on everything else relevant to your profile as a Rice Business candidate. Make sure to focus on what you’ve actually accomplished rather than simply describing your role at work or at school, and quantify your achievements wherever you can.

Step 7: Write Your Essay

This is a multiphase step, because you'll want to think deeply about what you want to say about yourself and your goals. The Full-Time, Professional MBA and Hybrid MBA programs require two essays and the Executive MBA requires one.

It’s important to be clear and concise. Tell us your story and not what you think we want to hear. Be authentic. Don't simply list the facts. We want to hear your voice, get to know you and understand what will make you unique as a student and a member of the Rice Business community. Finally, don't forget to check your spelling. Feel free to reference the most updated information about our essay requirements here.

Step 8: Put It All Together

Now it's time to upload anything that you haven't already put online: your scanned transcripts, the names of your recommenders, the final version of your essay. Double-check that you've filled out all requested biographical and practical questions, such as your birth date, address and contact information. Proofread – and submit!

Step 9: Other Assessments

The Rice Business application process includes other assessments with candidates who are selected as finalists during our review. We have a tight-knit, collaborative learning environment and these assessments are an opportunity to learn why you belong here. Please reference the MBA admissions guide to learn more.

Step 10: Acknowledge Taking A Stride Forward

Give yourself a treat: take yourself to dinner or enjoy some time in nature. You've applied to one of the top business schools in the country and made a substantive stride toward the future.

Ready to start your application?

Apply Now