Understanding Corporate Governance through Learning Models of Managerial Competence

Benjamin Hermalin and Michael Weisbach

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: A manager's shareholders, board of directors, and potential future employers are continually assessing his ability. 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. Consequently, assessment (or learning) is a key perspective from which to study, evaluate, and possibly even regulate corporate governance. Moreover, because learning is a behavior notoriously subject to systematic biases, this perspective is a natural avenue through which to introduce behavioral and psychological insights into the study of corporate governance.

JEL-codes: D81 D83 G34 M12 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-cfn and nep-ger
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Citations: View citations in EconPapers (4)

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Working Paper: Understanding Corporate Governance Through Learning Models of Managerial Competence (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2014-04

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