CEO-director ties and labor investment efficiency

被引:156
作者
Khedmati, Mehdi [1 ]
Sualihu, Mohammed Aminu [1 ]
Yawson, Alfred [2 ]
机构
[1] Monash Univ, Monash Business Sch, Level 10,Menzies Bldg,Clayton Campus, Clayton, Vic 3800, Australia
[2] Univ Adelaide, Business Sch, 10 Pulteney St, Adelaide, SA 5005, Australia
关键词
Labor; Investment; Monitoring; CEOs; Directors; FINANCIAL-REPORTING QUALITY; CORPORATE GOVERNANCE; FIRM PERFORMANCE; BOARD CONNECTIONS; CAPITAL STRUCTURE; STOCK-PRICE; SOCIAL TIES; COSTS; NETWORKS; EARNINGS;
D O I
10.1016/j.jcorpfin.2019.101492
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
We examine the impact of CEO-director ties on labor investment efficiency. Using an aggregate measure of CEO-director ties we find that CEOs who have strong ties with independent board members are associated with inefficient labor investment. The effect is stronger in firms that rely more on skilled labor and those that are financially constrained, and that inefficient labor investment exacerbates labor cost stickiness. Our results are robust to selection bias, endogeneity concerns, and alternative explanations. Overall, the results are consistent with the view that stronger CEO ties to independent board members makes monitoring ineffective, which, in turn, aggravates the inefficient labor investment problem. Thus, we identify a potential channel through which CEO-director ties can be detrimental to shareholder value.
引用
收藏
页数:24
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