Corporate Governance in a Competitive Environment
Richard C. Sansing
Dartmouth College - Tuck School of Business; CentER, Tilburg University
Dartmouth College - Tuck School of Business
June 8, 2006
AAA 2007 Financial Accounting & Reporting Section (FARS) Meeting Paper
We examine a firm's corporate governance choices within a competitive environment. A firm can choose a passive board that delegates decision rights to the executive manager, or an active board that retains these rights. We characterize the equilibrium governance choices and find that there generally is no systematic relation between governance systems and firm performance. We discuss how the governance choice is affected by the rate of technological innovation, board expertise, the discount rate, the benefit of using new technology, and the cost of operating an internal control system. Finally, we analyze consequences of the Sarbanes-Oxley Act.
Number of Pages in PDF File: 54
Keywords: Corporate governance, board of directors, internal controls, competition
JEL Classification: G31, G34working papers series
Date posted: June 11, 2006
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