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MUTUAL MONITORING AND CORPORATE GOVERNANCE


Abstract Mutual monitoring in a well-structured authority system can mitigate the agency problem. I empirically examine whether the number 2 executive in a firm, if given authority, incentive, and channels for communication and influence, is able to monitor and constrain the potentially self-interested CEO. I find strong evidence that: (1) measures of the presence and extent of mutual monitoring from the No. 2 executive are positively related to future firm value (Tobin's Q); (2) the beneficial effect is more pronounced for firms with weaker corporate governance or CEO incentive alignment, with stronger incentives for the No. 2 executives to monitor, and with higher information asymmetry between the boards and the CEOs; (3) such mutual monitorin... (more)
Created Date 2012
Contributor Li, Zhichuan (Author) / Coles, Jeffrey (Advisor) / Hertzel, Michael (Committee member) / Bharath, Sreedhar (Committee member) / Babenko, Ilona (Committee member) / Arizona State University (Publisher)
Subject Finance / Economics / Business / Agency problem / Authority differential / Corporate governance / Mutual monitoring / No. 2 executive / Pay gap
Type Doctoral Dissertation
Extent 100 pages
Language English
Copyright
Reuse Permissions All Rights Reserved
Note Ph.D. Business Administration 2012
Collaborating Institutions Graduate College / ASU Library
Additional Formats MODS / OAI Dublin Core / RIS


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Description Dissertation/Thesis