Knighthoods, Damehoods, and CEO Behaviour
Norwegian School of Economics (NHH)
Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research
October 18, 2015
We study whether and how politicians can inﬂuence the behaviour of CEOs and ﬁrm performance with prestigious government awards. We present a simple model to develop the hypothesis that government awards have a negative effect on ﬁrm performance. The empirical analysis uses two legal reforms in New Zealand for identiﬁcation: Knighthoods and damehoods were abolished in April 2000 but reinstated in March 2009. The ﬁndings are consistent with the predictions of the model. The results suggest that government awards serve as an incentive tool through which politicians inﬂuence ﬁrms in favour of employees to the detriment of shareholders.
Number of Pages in PDF File: 47
Keywords: Awards, CEO Incentives, Employment, Stakeholder-oriented Firms
JEL Classification: G38, J33, J38
Date posted: April 5, 2014 ; Last revised: October 19, 2015
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