Bottom-Up Corporate Governance

Augustin Landier, David Sraer and David Thesmar
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David Sraer: Crest

No 2005-30, Working Papers from Center for Research in Economics and Statistics

Abstract: This paper 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.

Pages: 50
Date: 2005
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Citations: View citations in EconPapers (2)

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http://crest.science/RePEc/wpstorage/2005-30.pdf Crest working paper version (application/pdf)

Related works:
Journal Article: Bottom-Up Corporate Governance (2013)
Working Paper: Bottom-Up Corporate Governance (2012)
Working Paper: Bottom-Up Corporate Governance (2006)
Working Paper: Bottom-Up Corporate Governance (2005)
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