Agency theory suggests that high pay-performance sensitivity (PPS) of CEO's compensation is an important motivation mechanism to the CEO to improve corporate performance. We develop a simple model that suggests that reverse causality should also be considered. Specifically, our model predicts...

Financial strategy is about how companies raise funds and manage them within their organizations. Corporate governance is relevant to both of these aspects, and an understanding of corporate governance is vital for an appreciation of corporate finance. This chapter from Corporate Financial...

Recent revisionist accounts of corporate governance in both business history and finance are challenging the tradition narrative, associated with Berle and Means (1932) and Chandler (1977), in which the American model of diffuse ownership and coherent diversification is both an inevitable...

The debate on employee representation on corporate boards has received considerable attention from scholars and politicians around the world. We provide new insights to this ongoing discussion by applying power indices from game theory to examine the actual voting power of employees on boards...