53 Pages Posted: 5 Apr 2014 Last revised: 21 Oct 2016
Date Written: September 27, 2016
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.
Keywords: Awards, CEO Incentives, Employment, Stakeholder-oriented Firms
JEL Classification: G38, J33, J38
Suggested Citation: Suggested Citation
Raff, Konrad and Siming, Linus, Knighthoods, Damehoods, and CEO Behaviour (September 27, 2016). Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2420066 or http://dx.doi.org/10.2139/ssrn.2420066
By Nico Lehmann