Title: | Bottom-Up Corporate Governance |
Authors: | Landier, Augustin Sraer, David Thesmar, David |
Issue Date: | 20-Oct-2005 |
Series/Report no.: | CLB-06-007 |
Abstract: | In many instances, “independently-minded” top-ranking execu-tives can impose strong discipline on their CEO, even though they are formally under his authority. This paper argues that the use of such a disciplining mechanism is a key feature of good corporate gov-ernance. We provide robust empirical evidence consistent with the fact that firms with high internal governance are more efficiently run. We em-pirically label as “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 after large acquisitions. These results are unaffected when we control for traditional governance measures such as board independence or other well-studied shareholder-friendly provisions. |
URI: | http://hdl.handle.net/2451/25979 |
Appears in Collections: | NYU Pollack Center for Law & Business Working Papers |
Files in This Item:
File | Description | Size | Format | |
---|---|---|---|---|
06-007.pdf | 462.96 kB | Adobe PDF | View/Open |
Items in FDA are protected by copyright, with all rights reserved, unless otherwise indicated.