Brown bag seminar with Murat Tarakci
“Performance Feedback and Index Funds”, Date: Wednesday, 22nd January 2025: 12:00-14:00, WEV F109-111
The Chair of Strategic Management and Innovation at ETH invites you to the brown bag seminar with:
Murat Tarakci
Rotterdam School of Management (RSM), Erasmus University Rotterdam
external page Speaker website
Date: Wednesday, January 22, 12:00-14:00
Location: WEV F 109-111
Presentation title: Performance Feedback and Index Funds
Abstract
The Behavioral Theory of the Firm (BTF) casts firms as coalitions learning from performance feedback. Yet, the seismic changes in coalition composition, particularly due to the rise of passive institutional ownership, demand a reexamination of these dynamics. Passive index funds held nearly 50%, spearheaded by the "Big Three" owning over 20%, of the U.S. market capitalization in 2023. Our research design leverages exogenous shifts in Russell index memberships—affecting ownership but not performance. Analyzing data from 5,645 firms in the Russell 3000 indices between 2007 and 2019, we show that firms with increased passive institutional ownership take less strategic risk, invest less in R&D, and file fewer and less valuable parents after negative (positive) feedback than firms without such ownership changes. These findings contribute to the BTF by unveiling the numbing effect of passive ownership—a key coalition member—on firms’ responsiveness to performance feedback.
About the speaker
Murat Tarakci is Professor of Innovation Strategy at the Rotterdam School of Management, Erasmus University. An innovation strategy inspires, directs, and calibrates innovation activities to achieve the organization’s strategic-level goals and to tackle the world's problems. Accordingly, Murat's research examines how organizations are structured, function, and evolve in response to their environments. At its core, his work also aims to create a positive impact by helping organizations better address societal grand challenges through a deeper understanding of their underlying dynamics and mechanisms. His research has been published in leading academic journals and been featured in popular practitioner outlets. Murat recognizes that an organization’s ability to innovate for the greater good requires a collaborative effort. Accordingly, he regularly coaches executives and helps organizations with their innovation and strategy-related challenges.
We look forward to welcoming you!