Knighthoods, Damehoods, and CEO Behaviour
Norwegian School of Economics (NHH)
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 knighthoods and damehoods. Our model predicts that such 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 highly prestigious and scarcely awarded honours to the detriment of shareholders.
Keywords: Awards, CEO Incentives, Knighthood, Competition
JEL Classification: G30, J33, J38working papers series
Date posted: April 5, 2014 ; Last revised: July 30, 2014
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