Me or We: The Effects of CEO Organizational Identification on Agency Costs

Academy of Management Journal, Forthcoming

Posted: 21 May 2010

See all articles by Steven Boivie

Steven Boivie

Texas A&M University - Department of Management

Donald Lange

affiliation not provided to SSRN

Michael L. McDonald

University of Central Florida - College of Business Administration

James D. Westphal

University of Michigan - Stephen M. Ross School of Business

Date Written: May 20, 2010

Abstract

The corporate governance literature on potential remedies to the agency problem has focused largely on external control mechanisms, especially board independence. We instead consider how an internal, psychological factor – CEO organizational identification – might influence the extent to which firms incur agency costs, e.g., those entailed by the decoupling of CEO pay and perquisites from firm performance. Our theory and findings explain why CEOs with high organizational identification will avoid pursuit of personal gains that can harm the firm and its image. We further show how board independence is less likely to reduce agency costs when CEO organizational identification is high.

Keywords: identification, CEOs, perquisities

Suggested Citation

Boivie, Steven and Lange, Donald and McDonald, Michael L. and Westphal, James D., Me or We: The Effects of CEO Organizational Identification on Agency Costs (May 20, 2010). Academy of Management Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1612442

Steven Boivie (Contact Author)

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States

Donald Lange

affiliation not provided to SSRN ( email )

Michael L. McDonald

University of Central Florida - College of Business Administration ( email )

PO Box 161400
Orlando, FL 32816
United States

James D. Westphal

University of Michigan - Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

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