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CEO Hubris and Firm Performance: Exploring the Moderating Roles of CEO Power and Board Vigilance

Jong-Hun Park (), Changsu Kim (), Young Kyun Chang (), Dong-Hyun Lee () and Yun-Dal Sung ()
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Jong-Hun Park: Sogang University
Changsu Kim: Sogang University
Young Kyun Chang: Sogang University
Dong-Hyun Lee: Sogang University
Yun-Dal Sung: Sogang University

Journal of Business Ethics, 2018, vol. 147, issue 4, 919-933

Abstract: Abstract This study focuses on CEO hubris and its detrimental effect on corporate financial performance along with an examination of critical corporate governance contingencies (CEO power and board vigilance) that may moderate the negative effect. From 654 observations of 164 Korean firms over the years 2001–2008, we found that CEO power exacerbated the negative effect of CEO hubris on corporate financial performance, whereas board vigilance mitigated it. This study provides empirical evidence that entrenchment problems arising from CEO hubris would be exacerbated as CEOs become more powerful, but weakened as board of directors become more vigilant. Theoretical contributions and practical implications will be discussed.

Keywords: CEO hubris; CEO power; Board vigilance; Korea (search for similar items in EconPapers)
Date: 2018
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