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Understanding Corporate Governance Through Learning Models of Managerial Competence
Author(s) -
Hermalin Benjamin E.,
Weisbach Michael S.
Publication year - 2019
Publication title -
asia‐pacific journal of financial studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.375
H-Index - 15
eISSN - 2041-6156
pISSN - 2041-9945
DOI - 10.1111/ajfs.12243
Subject(s) - corporate governance , incentive , competence (human resources) , shareholder , business , accounting , public relations , psychology , political science , economics , social psychology , finance , microeconomics
Shareholders, the board of directors, and potential future employers are continually assessing any CEO 's quality. As documented by an extensive literature, such assessment plays a critical role in corporate governance because it generates incentives (good and bad), introduces assorted risks, and affects the various battles that rage among the relevant actors for corporate control. Consequently, assessment (or learning) is a key perspective from which to study, understand, and possibly even regulate corporate governance. Moreover, because learning is a behavior notoriously subject to systematic biases, assessment is a natural avenue through which to introduce behavioral and psychological insights into the study of corporate governance.