Corporate Boards, Visionary Managers, and Heterogeneous Beliefs
Visionary CEOs have strong beliefs about the right course of action for the firm. How should a board of directors that does not necessarily share the visionary CEO's confidence advise and monitor the CEO? We consider a model in which the board can acquire costly information about the firm's optimal strategic direction. The board not only advises the CEO on strategy, but also must approve it, and the CEO expends effort to implement the strategy. We find that depending on how strongly the CEO believes in his vision, the board acquires less information, and either plays an advisory role, a monitoring role, or a rubber-stamping role. The model suggests that in firms that are led by highly visionary CEOs, boards are passive in that they acquire little information and rubber stamp the visionary's proposal. Nevertheless, shareholders prefer the visionary over an unbiased replacement in industries in which obtaining information about the correct course of action is difficult and costly
Year of publication: |
[2022]
|
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Authors: | Jiang, Xu ; Laux, Volker |
Publisher: |
[S.l.] : SSRN |
Subject: | Theorie | Theory | Vorstand | Executive board | Führungskräfte | Managers | Corporate Governance | Corporate governance |
Saved in:
freely available
Extent: | 1 Online-Ressource (34 p) |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 29, 2021 erstellt |
Other identifiers: | 10.2139/ssrn.3974228 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10013307646
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