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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/26713
Title: CORPORATE GOVERNANCE OVER THE BUSINESS CYCLE
Authors: Philippon, Thomas
Issue Date: Jul-2003
Series/Report no.: S-CG-03-03
Abstract: I provide empirical evidence that badly governed firms respond more to aggregate shocks than do well governed firms. I build a simple model where managers are prone to overinvest and where shareholders are more willing to tolerate such a behavior in good times. The model successfully explains the average profit differences as well as the cyclical behavior of sales, employment and investment for firms with different governance qualities. The quantitative results suggest that governance conflicts can explain 30% of aggregate volatility.
URI: http://hdl.handle.net/2451/26713
Appears in Collections:Corporate Governance

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