Are the Seeds of Bad Governance Sown in Good Times?
Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)
Ebonya L. Washington
Yale University - Department of Economics; National Bureau of Economic Research (NBER)
March 7, 2010
AFA 2011 Denver Meetings Paper
This paper examines the extent to which corporate governance structure arises endogenously with respect to firm performance. We demonstrate that following periods of abnormally good performance managers are more likely to call special meetings and to propose and pass bad governance measures. These results are driven by firms that begin the sample time frame characterized as having poor governance according to either the GIM Index or the proportion of active shareholders. While we cannot definitively separate out the extent to which our results are driven by shareholders’ desire to reward management for good performance or shareholders’ inattention following that good performance, we provide evidence consistent with the latter interpretation.
working papers series
Date posted: March 17, 2010
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo6 in 1.157 seconds