Journal ArticleDOI
Boards, CEO Entrenchment and the Cost of Capital
TLDR
In this article, the authors argue board ability is also important and that corporate boards will be reluctant to replace CEOs as this makes financing expensive by sending a negative signal about board ability.Abstract:
Existing research on CEO turnover focuses on CEO ability. This paper argues board ability is also important. Corporate boards will be reluctant to replace CEOs as this makes financing expensive by sending a negative signal about board ability. This differs from existing literature: entrenchment does not result from CEO power, nor agency problems. Entrenchment is mitigated when there are more assets-in-place relative to investment opportunities. The paper also compares public and private equity ownership. Private ownership eliminates CEO entrenchment, but a share price guides investment decisions. Finally, the model implies that board choice in publicly listed firms will be conservative.read more
Citations
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Book ChapterDOI
Boards, and the Directors Who Sit on Them
TL;DR: In this article, a select review of the literature on boards with evidence from a variety of data sets is presented, highlighting that many topics for future research remain and that to understand boards we need to understand the people who sit on them.
Journal ArticleDOI
CEO Turnover in LBOs: The Role of Boards
TL;DR: In this article, the authors examine the CEO turnover in LBOs backed by private equity funds and find that when a company is taken private, CEO turnover decreases and is less contingent on performance.
Journal ArticleDOI
The effects of culture on CEO power: Evidence from executive turnover
TL;DR: In this paper, a hand-collected dataset with more than 5000 forced and voluntary CEO transitions across 37 countries was used to find that CEOs are less likely to be dismissed for bad performance in more hierarchical countries.
Journal ArticleDOI
Understanding Corporate Governance Through Learning Models of Managerial Competence
TL;DR: A rich literature has documented that this insight has profound implications for corporate governance because assessment generates incentives (good and bad), introduces assorted risks, and affects the various battles that rage among the relevant actors for corporate control as discussed by the authors.
Posted Content
Deadlock on the Board
TL;DR: In this paper, the authors develop a dynamic model of board decision making and show that directors may knowingly retain the policy they all think is the worst just because they fear they may disagree about what policy is best in the future-the fear of deadlock begets deadlock.
References
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Journal ArticleDOI
Large Shareholders and Corporate Control
Andrei Shleifer,Robert W. Vishny +1 more
TL;DR: In this article, the authors explore a model in which the presence of a large minority shareholder provides a partial solution to the free-rider problem in a corporation with many small owners, where the corporation may not pay any one of them to monitor the performance of the management.
Journal ArticleDOI
The use of knowledge about society
TL;DR: In this article, the authors argue that political competition fails to inform constituents of the costs of forgone political alternatives, which prevents the adoption of welfare enhancing reforms of public institutions and policies.
Journal ArticleDOI
Takeover Bids, The Free-Rider Problem, and the Theory of the Corporation
Oliver Hart,Sanford J. Grossman +1 more
TL;DR: In this paper, the authors study privately and socially optimal corporate charters under the alternative assumptions of competition and monopoly in the market for corporate control, and analyze exclusionary devices that can be built into the corporate charter to overcome this free-rider problem.
Posted Content
Endogenously Chosen Boards of Directors and Their Monitoring of the CEO
TL;DR: In this article, the authors developed a model in which the effectiveness of the board's monitoring of the CEO depends on the board independence, and the independence of new directors is determined through negotiations (implicit or explicit) between the existing directors and the CEO.
Journal ArticleDOI
Agreeing to Disagree
TL;DR: Two people, 1 and 2, are said to have common knowledge of an event E if both know it, and 1 knows that 2 knows it, 2 knows that 1 knows It, and so on.