Does CEO Power Affect the Association Between CEO Compensation and Tangible Assets Impairments?

This paper examines the association between CEO compensation and tangible long-lived assets impairment. We find that the level of CEO compensation is negatively associated with the tangible long-lived assets impairment charges. We also document that in firms with CEOs who have more decision-making power, the negative association between CEO compensation and tangible long-lived assets impairment charges is mitigated. Specifically, the negative association between CEO compensation and tangible long-lived assets impairment charges is less pronounced (1) when CEO chairs the board, (2) when CEO is the founder of the firm, (3) when the CEO is involved in the director selection process, and (4) when overall board independence is low.

Neglecting Peter to Fix Paul: How Shared Directors Transmit Bank Shocks to Nonfinancial Firms

We trace a corporate governance channel of bank shock transmission into the real economy. Using 1,245 U.S. bank enforcement actions (EAs) issued between 1990 and 2017, we show that when a nonfinancial firm (NFF) and bank share a common director, NFF stock prices fall around bank EAs. Severe EAs elicit more negative returns. During enforcement, valued directors substitute NFF board meeting attendance with bank board meeting attendance. Impaired credit relationships, director reputational damage, and endogenous director selection cannot fully explain our results. These findings imply that shared directors could transmit larger bank shocks into the real economy.

The Multi-Stage Social Influence Process in CEO–Board Relationships

The CEO’s social influence over the board of directors is a primary determinant of symbolic action. In this chapter we explain how CEOs acquire social influence over the board through a multi-stage, multi-level process in which appearances are decoupled from actual behavior at each stage. The influence process begins with director selection, and is reinforced through socialization, ongoing interpersonal influence tactics such as ingratiation, social control of counter-normative behavior, and recommendations for board appointments. We describe a pervasive pattern of decoupling between directors’ rhetoric about CEO–board relationships and the reality of actual board behavior, and explain how this decoupling is reinforced by the socially constructed beliefs of directors themselves, and by self-serving biases that protect directors’ personal and social identities.