Do Managers Do Good with Other People's Money?

Ing-Haw Cheng, Harrison Hong and Kelly Shue

No 19432, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We find support for two key predictions of an agency theory of unproductive corporate social responsibility. First, increasing managerial ownership decreases measures of firm goodness. We use the 2003 Dividend Tax Cut to increase after-tax insider ownership. Firms with moderate levels of insider ownership cut goodness by more than firms with low levels (where the tax cut has no effect) and high levels (where agency is less of an issue). Second, increasing monitoring reduces corporate goodness. A regression discontinuity design of close votes around the 50% cut-off finds that passage of shareholder governance proposals leads to slower growth in goodness.

JEL-codes: D03 G02 G10 G3 G39 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-acc and nep-hrm
Note: CF
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Citations: View citations in EconPapers (60)

Published as Ing-Haw Cheng & Harrison Hong & Kelly Shue & Andrew Ellul, 2023. "Do Managers Do Good with Other People’s Money?," The Review of Corporate Finance Studies, vol 12(3), pages 443-487.

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