Knighthoods, Damehoods, and CEO Behaviour
VU University Amsterdam
Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research
April 3, 2014
This paper studies theoretically and empirically whether and how governments can affect the behaviour of CEOs through the use of awards and honours. Our model predicts that government awards have a negative effect on firm performance. This effect is stronger in non-competitive industries. The empirical analysis uses two legal reforms in New Zealand: knighthoods and damehoods were abolished in April 2000 but reinstated in August 2009. The findings are consistent with the predictions of the model. Overall, our results indicate that governments can redirect firms towards a "stakeholder view"; through the use of government awards to the detriment of shareholders.
Number of Pages in PDF File: 23
Keywords: Awards, CEO Incentives, Knighthood, Competition
JEL Classification: G30, J33, J38working papers series
Date posted: April 5, 2014
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