TY - JOUR
T1 - Information control, career concerns, and corporate governance
AU - Song, Fenghua
AU - Thakor, Anjan V.
PY - 2006/8
Y1 - 2006/8
N2 - We examine corporate governance effectiveness when the CEO generates project ideas and the board of directors screens these ideas for approval. However, the precision of the board's screening information is controlled by the CEO. Moreover, both the CEO and the board have career concerns that interact. The board's career concerns cause it to distort its investment recommendation procyclically, whereas the CEO's career concerns cause her to sometimes reduce the precision of the board's information. Moreover, the CEO sometimes prefers a less able board, and this happens only during economic upturns, suggesting that corporate governance will be weaker during economic upturns.
AB - We examine corporate governance effectiveness when the CEO generates project ideas and the board of directors screens these ideas for approval. However, the precision of the board's screening information is controlled by the CEO. Moreover, both the CEO and the board have career concerns that interact. The board's career concerns cause it to distort its investment recommendation procyclically, whereas the CEO's career concerns cause her to sometimes reduce the precision of the board's information. Moreover, the CEO sometimes prefers a less able board, and this happens only during economic upturns, suggesting that corporate governance will be weaker during economic upturns.
UR - https://www.scopus.com/pages/publications/33746861192
U2 - 10.1111/j.1540-6261.2006.00891.x
DO - 10.1111/j.1540-6261.2006.00891.x
M3 - Article
AN - SCOPUS:33746861192
SN - 0022-1082
VL - 61
SP - 1845
EP - 1896
JO - The Journal of Finance
JF - The Journal of Finance
IS - 4
ER -