Year: 2022

Congratulations to Chanakan Wittayasakpan and Chayaton Subchavaroj, 4th year students from the Faculty of Arts and the Chulalongkorn Business School, for winning the English debating competition during the Asian British Parliament Debating Championship 2021, on 22-31 October 2021.

Organized by the Diplomatic Academy of Vietnam (DAV), and Shanghai University of Finance and Economics (SUFE), the competition was one of the largest English online debating championships in history, combining two Asian English debating competitions due to the Covid-19 pandemic. This year’s competition drew 192 teams from 179 academic institutions in China and other Asian countries.

Chanakan and Chayaton revealed that the debate topics were diverse: politics, foreign, economic, social, feminists, minorities, and gender equality. During the debate, each team got 15 minutes to prepare before taking turns speaking for 7 minutes. For the final round, the team performing as the proposition received the topic on “Technology to erase sadness should be allowed to use”. They added that compared to things that already exist in today’s world, the topic was rather abstract and it became difficult to create ideas clearly. Fortunately, extra reading got them better prepared and more ready to speak on the topic.

Both Chanakan and Chayaton primarily studied by listening to lectures and watching debating competitions on YouTube. Moreover, they prepared for a variety of topics, practiced and tried to collected as much knowledge as possible, including the one-year experience they gained from other matches, under the supervision of Dr. Bhanubhatra Jittiang.

The two students regularly practiced at the Chulalongkorn University English Debate Society under great support from the Office of Student Affairs, Chulalongkorn University. At the same time, whenever they noticed that they were inferior at any point, they practiced more. To de-stress, as needed, their strategy was to switch into listeners rather than debaters.

Both agreed that teamwork was the key to success, as they have been practicing together for a long time, starting from the freshman year. Each knew how and what the other was thinking, and what needs to be added. This was significant for their progress towards the most crucial component of the debate.

Chanakan and Chayaton reflected that the debating competition has definitely broadened their views. Because of the numerous societal topics, it is vital to understand the world from various perspectives. The competition has made them feel exceptional, since they could surpass their own standards from the previous debates and could stand at a point they have never been. “It’s a fantastic experience”, they said.

The main challenge was on the debate topics, because some of the topics were unfamiliar. Another problem was with using English. Many teams were from countries with English as a primary language, but this forced them to improve themselves to compete better. Also, since the competition was online and in order to communicate more clearly, Chanakan and Chayaton had to adjust the way they spoke, knowing that it would affect how the judges heard their points and decide.

Two great debaters addressed the students, who aspire to be English debaters, and one said that, “I’d like you to continue practicing debating in English. The most important thing is to devote a significant amount of time to the debating competition, not to give up, and get into the essence of the debate. The use of English is not a barrier because thinking is the heart of the debate. If you can think analytically, you will be able to respond to the questions posed by your opponent, and that is deemed successful.”

The benefits and drawbacks of generalist CEOs – those with the talent and skill to manage companies in various industries – have been fiercely debated in contemporary research. Some research touts generalist CEOs’ varied professional experiences and ability to launch a wide range of strategic initiatives. Other research warns of their tendency to switch jobs easily, which may mean that their motivations do not align with those of shareholders and prompt them to give short-term investments priority over above longer-term, but more beneficial, projects.

Our research contributes to the debate by exploring how independent directors view generalist and specialist CEOs. Boards of directors are often considered the ultimate governance mechanism for resolving agency conflicts, and, as outsiders, independent directors are more likely to be impartial. As a consequence, the degree of board independence is often used as a measure of board quality. Since effective board governance leads to shareholder-friendly corporate decisions and activities, a great deal of research demonstrates that independent directors are valuable. Therefore, to the extent that generalist CEOs enhance shareholders’ wealth, independent directors should view them favorably.

It is, however, challenging to test this argument empirically because, in economics and finance, it is not possible to run a randomized experiment where certain firms are assigned more independent directors than others are. Fortunately, there is a quasi-natural experiment where only certain firms are forced involuntarily to change their board independence by a regulation. This is analogous to a randomized experiment. Interestingly, three economists have just been given a Nobel Prize for their work related to this empirical method (David Card, Guido Imbens, and Joshua Angrist).

In 2002, the Sarbanes-Oxley Act, along with new stock exchange rules, required that publicly traded firms have a majority of independent directors on the board. This requirement served as an unexpected exogenous shock to companies who had to appoint more independent directors to comply. Using a difference-in-difference estimation, we compare, before and after the passage of the law, the change in the general ability of the CEOs of firms forced to appoint more independent directors to the change in the general ability of the CEOs of firms not affected by the law. Firms required to change their board composition were the treatment group, and firms unaffected by the law were the control group.

Our difference-in-difference estimates reveal that firms compelled to increase board independence show a smaller improvement in CEO ability than do other firms, suggesting that independent directors do not view generalist CEOs favorably. Our findings are consistent with the notion that generalist CEOs may have incentives that conflict with those of shareholders, resulting in an incentive misalignment. For instance, generalist CEOs are less likely to be risk-averse (Custodio et al., 2013; Mishra, 2014). Supporting this argument, Mishra (2014) reports that having a generalist CEO leads to a significantly higher cost of equity capital. Moreover, because generalist CEOs tend to change jobs more often, they may not take the long-term perspective required to enhance shareholder value. Furthermore, our results are consistent with those in Ma, Ruan, Wang, and Zhang (2021), who find that companies with generalist CEOs have significantly lower credit ratings, implying that credit rating agencies view generalist CEOs as a credit risk factor. Their results are consistent with ours. Both independent directors and credit rating agencies view generalist CEOs unfavorably.

We also run several checks to ensure that our findings are robust. For instance, we execute propensity score matching, where we carefully match each treatment firm to another firm outside the treatment group that is most similar based on several firm characteristics. So, our treatment and control firms are nearly identical except for board independence. This technique increases the probability that the findings are driven by board independence, not by any other firm characteristics. Moreover, an instrumental variable analysis, which is more likely to reveal a causal effect, corroborates our findings. Finally, we apply Oster’s (2019) method for testing coefficient stability and find that our conclusion is robust.

Our results contribute to the debate about generalist CEOs. Most prior studies concentrate on assessing the effects of generalist CEOs on corporate outcomes and policies. Our study, however, adopts a unique approach, focusing on how independent directors view generalist CEOs. Furthermore, our study contributes to the literature that exploits the Sarbanes-Oxley Act to ascertain the effects of board independence on various corporate outcomes. Our study is the first to apply this approach to explore the impact of board independence on general managerial skills.