CEO Connectedness within Executive Suites and Corporate Frauds

Khanna, Vikramaditya S.; Kim, E. Han; Lu, Yao

doi:10.2139/ssrn.2021059

Cited by 5 publications

(3 citation statements)

References 44 publications

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“…Our study contributes to the new internal governance literature of Acharya, Myers, and Rajan, (2011), Kim and Lu (2012), and Khanna, Kim and Lu (2015). Arguably, the largest internal governance actor or gatekeeper is the general counsel; this important facet of internal governance warrants a big-picture study that looks at its overall effectiveness as well as its interaction with equity incentives.…”

Section: Introductionmentioning

confidence: 87%

Executive Lawyers: Gatekeepers or Strategic Officers?

Morse¹,

Wang²,

Wu³

2016

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Lawyers now serve as executives in 44% of corporations. Although endowed with gatekeeping responsibilities, executive lawyers face increasing pressure to use time on strategic efforts. In a lawyer fixed effects model, we quantify that lawyers are half as important as CEOs in explaining variances in compliance, monitoring, and business development. In a difference-indifferences model, we find that hiring lawyers into executive positions associates with 50% reduction in compliance breaches and 32% reduction in monitoring breaches. We then ask whether firms' optimal contracting of lawyers into strategic activities implies less lawyer gatekeeping effort. Using a design comparing executive lawyers hired from law firms to lawyers poached from corporations, we find that lawyers hired with high compensation delta (indicative of the importance of strategic goals in compensation contracts) do less monitoring, preventing 25% fewer breaches than are typically mitigated by having an executive gatekeeper. Reassuringly, lawyers do not compromise compliance.

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Section: Introductionmentioning

confidence: 87%

Executive Lawyers: Gatekeepers or Strategic Officers?

Morse¹,

Wang²,

Wu³

2016

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show abstract

Section: Introductionmentioning

confidence: 87%

Executive Lawyers: Gatekeepers or Strategic Officers?

Morse

Wei

2016

The Journal of Law and Economics

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Lawyers now serve as executives in 44% of corporations. Although endowed with gatekeeping responsibilities, executive lawyers face increasing pressure to use time on strategic efforts. In a lawyer fixed effects model, we quantify that lawyers are half as important as CEOs in explaining variances in compliance, monitoring, and business development. In a difference-in-differences model, we find that hiring lawyers into executive positions associates with 50% reduction in compliance breaches and 32% reduction in monitoring breaches. We then ask whether firms' optimal contracting of lawyers into strategic activities implies less lawyer gatekeeping effort. Using a design comparing executive lawyers hired from law firms to lawyers poached from corporations, we find that lawyers hired with high compensation delta (indicative of the importance of strategic goals in compensation contracts) do less monitoring, preventing 25% fewer breaches than are typically mitigated by having an executive gatekeeper. Reassuringly, lawyers do not compromise compliance.

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“…In that direction, Bebchuk, Cremers, and Peyer (2007) established that CEO connection has negative impact on firm performance. Similarly, Khanna, Kim, and Lu (2012) maintained that CEO connectedness increase the chance of fraud.…”

Section: Literature Review Theoretical Frameworkmentioning

confidence: 99%

CEO Experience and Firm Performance: Evidence from Nigerian Financial Sector

Saidu¹,

Baba²

2020

j.financ.econ.res

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Experiences in many aspects are important in determining factor for the selection and promotion of employees, especially to managerial positions. However, empirical evidence on the contribution of CEO experiences to firm outcomes is limited. This paper attempts to address the literature gap by examining the impact of CEO experience on the firm financial performance of the listed firms in the financial sector. The study uses balanced panel data for six years from 2011 to 2016 in running regression analysis. Independent variables that include the CEO tenure and CEO multiple board memberships are considered in measuring the CEO experience. The result from the analysis indicates that CEO tenure has a negative effect on firm performance measured by ROA. The finding supports the view of the agency theory that CEO has an opportunistic tendency when they stay longer than the industry average. The implication is that the CEO that stays long in office need to be closely monitored so that they could use their know-how in pursuing the goals of the organisation rather than their selfish goals.

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CEO Connectedness within Executive Suites and Corporate Frauds

Cited by 5 publications

References 44 publications

Executive Lawyers: Gatekeepers or Strategic Officers?

Executive Lawyers: Gatekeepers or Strategic Officers?

Executive Lawyers: Gatekeepers or Strategic Officers?

CEO Experience and Firm Performance: Evidence from Nigerian Financial Sector

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