Working paper
The Interactive Influence of External and Internal Governance on Risk Taking and Outcomes: The Importance of CEO Career Concerns
SSRN
11/05/2012
DOI: 10.2139/ssrn.2171005
Abstract
We study the effects of multi-layered governance on firm risk by focusing on the interaction of two types of career concerns. Two Delaware court decisions, the validation of poison pill defenses (the Unitrin decision) implemented by staggered boards (the Wallace decision), reduced takeover-related career concerns. CEO age influences the response of Delaware firms to these shocks. Older CEOs in newly insulated firms reduce risk, while their younger counterparts increase risk. Ex-post, the differential behavior among young Delaware CEOs appears to be rewarded with abnormally positive stock performance and better future career outcomes. We conclude that there is important variation in the effects of governance on firm (CEO) behavior, driven by multiple facets of career concerns.
Details
- Title: Subtitle
- The Interactive Influence of External and Internal Governance on Risk Taking and Outcomes: The Importance of CEO Career Concerns
- Creators
- Jon A GarfinkelJaewoo KimKyeong Hun Lee
- Resource Type
- Working paper
- Publisher
- SSRN
- DOI
- 10.2139/ssrn.2171005
- Number of pages
- 54 pages
- Language
- English
- Date posted
- 11/05/2012
- Date updated
- 08/23/2013
- Academic Unit
- Finance
- Record Identifier
- 9984380584802771
Metrics
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