Abstract

http://ssrn.com/abstract=2379612
 


 



The Value of the Chief Legal Officer to the Firm


Robert C. Bird


University of Connecticut - Department of Marketing

Paul Borochin


University of Connecticut School of Business

John D. Knopf


University of Connecticut - Department of Finance

January 8, 2014


Abstract:     
The CLO creates firm value when financial mismanagement occurs. Firm BHARs increase by 1% when the CLO is one of the top five highest compensated executives; this increases to nearly 4% for firms that have or will become targets of shareholder class-action lawsuits. We consider two possible channels for this added value: legal expertise and internal monitoring. We distinguish between the two by examining the effect of governance, opacity, turnover, and valuation on CLO standing. We conclude that it is the monitoring function rather than her legal expertise that is the source of the CLO’s greatest contribution to the firm.

Number of Pages in PDF File: 50

Keywords: Executive compensation, securities class action, corporate governance, general counsel

JEL Classification: G30, K20, K22, M12

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Date posted: January 17, 2014 ; Last revised: May 29, 2014

Suggested Citation

Bird, Robert C. and Borochin, Paul and Knopf, John D., The Value of the Chief Legal Officer to the Firm (January 8, 2014). Available at SSRN: http://ssrn.com/abstract=2379612 or http://dx.doi.org/10.2139/ssrn.2379612

Contact Information

Robert C. Bird (Contact Author)
University of Connecticut - Department of Marketing ( email )
Storrs, CT 06269
United States
860-486-6136 (Phone)
Paul Borochin
University of Connecticut School of Business ( email )
School of Business
2100 Hillside Road
Storrs, CT 06269
United States
John D. Knopf
University of Connecticut - Department of Finance ( email )
School of Business
2100 Hillside Road
Storrs, CT 06269
United States
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