Bottom-up Corporate Governance

Landier, Augustin, Sauvagnat, Julien, Sraer, David and Thesmar, David (2013) Bottom-up Corporate Governance. Review of Finance, 17 (1). pp. 161-201.

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Official URL: http://tse-fr.eu/pub/25611

Abstract

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.

Item Type: Article
Language: English
Date: 2013
Refereed: Yes
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:23
Last Modified: 07 Mar 2018 13:22
OAI ID: oai:tse-fr.eu:25611
URI: http://publications.ut-capitole.fr/id/eprint/15218

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