Information Asymmetry and Corporate Governance
In this study, we examine the impact of asymmetric information on three main mechanisms of corporate governance: the intensity of board monitoring, the exposure to market discipline, and the pay-for-performance sensitivity of CEO compensation. We find that firms facing greater asymmetric information tend to use less intensive board monitoring but rely more on market discipline and CEO incentive compensation. These results are consistent with the monitoring cost hypothesis. These results also support the notion that firms endogenously and optimally choose governance. Consistent with this viewpoint, we find that firm performance is not related to governance for the overall sample. However, firms suffer poor performance when they are forced to deviate from equilibrium. Our study therefore suggests that regulators should use caution when imposing uniform requirements on firms corporate governance.
corporate governance asymmetric information board monitoring pay-forperformance anti-takeover provisions
Jie (Jay) Cai Yixin Liu Yiming Qian
Drexel University LeBow College of Busienss Department of Finance Whittemore School of Business and Economics The University of New Hampshire Durham,NH 03824 Tippie College of Business Department of Finance The University of Iowa
国际会议
大连
英文
1-41
2008-07-02（万方平台首次上网日期，不代表论文的发表时间）