Understanding Corporate Governance Through Learning Models of Managerial Competence

Benjamin Hermalin and Michael Weisbach

No 20028, NBER Working Papers from National Bureau of Economic Research, Inc

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: 2014-04
New Economics Papers: this item is included in nep-cse
Note: CF LE LS
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Citations: View citations in EconPapers (4)

Published as Benjamin E. Hermalin & Michael S. Weisbach, 2019. "Understanding Corporate Governance Through Learning Models of Managerial Competence," Asia-Pacific Journal of Financial Studies, vol 48(1), pages 7-29.

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Working Paper: Understanding Corporate Governance through Learning Models of Managerial Competence (2014)
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