Bottom-Up Corporate Governance
This article empirically relates the internal organization of a firm with decision making quality and corporate performance. We call "independent from the CEO" a top executive who joined the firm before the current CEO was appointed. In a very robust way, firms with a smaller fraction of independent executives exhibit (1) a lower level of profitability and (2) lower shareholder returns following large acquisitions. These results are unaffected when we control for traditional governance measures such as board independence or other well-studied shareholder friendly provisions. One interpretation is that "independently minded" top ranking executives act as a counter-power imposing strong discipline on their CEO, even though they are formally under his authority. Copyright 2013, Oxford University Press.
Year of publication: |
2013
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Authors: | Landier, Augustin ; Sauvagnat, Julien ; Sraer, David ; Thesmar, David |
Published in: |
Review of Finance. - European Finance Association - EFA, ISSN 1572-3097. - Vol. 17.2013, 1, p. 161-201
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Publisher: |
European Finance Association - EFA |
Saved in:
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