Bottom-Up Corporate Governance

Augustin Landier, Julien Sauvagnat, David Sraer and David Thesmar

Review of Finance, 2013, vol. 17, issue 1, 161-201

Abstract: This article empirically relates the internal organization of a firm with decision making quality and corporate performance. We call "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 following large acquisitions. These results are unaffected when we control for traditional governance measures such as board independence or other well-studied shareholder friendly provisions. One interpretation is that "independently minded" top ranking executives act as a counter-power imposing strong discipline on their CEO, even though they are formally under his authority. Copyright 2013, Oxford University Press.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
http://hdl.handle.net/10.1093/rof/rfs020 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Bottom-Up Corporate Governance (2012)
Working Paper: Bottom-Up Corporate Governance (2006)
Working Paper: Bottom-Up Corporate Governance (2005)
Working Paper: Bottom-Up Corporate Governance (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:revfin:v:17:y:2013:i:1:p:161-201

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Review of Finance is currently edited by Marcin Kacperczyk

More articles in Review of Finance from European Finance Association Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press (joanna.bergh@oup.com).