The impact of disloyal managers on corporate governance—insights from Corporate Opportunity Waivers
The impact of disloyal managers on corporate governance—insights from Corporate Opportunity Waivers
In this study, we explore the role of agency problems in firm decisions. We exploit the staggered adoption of corporate opportunity waivers (COW) law, which weakens directors’ and officers’ duty of loyalty, as an external shock to agency conflicts. Using a Difference-in-Differences research design, we examine the changes of payout decision, overall firm value, and the use of accounting conservatism within a sample of U.S. listed entities from 1994 to 2022. We find significant decreases in total payout, share repurchasing, and firm value after the adoption of COW. Nevertheless, the level of accounting conservatism increases after passage of COW. The possible explanation is that firms increase accounting conservatism in response to the negative effect of the COW law.
Corporate Opportunity Waiver law, payout policy, accounting conservatism, firm value, information asymmetry, busy board, firm risk
University of Southampton
Zhang, Lin
e1d600fe-6c28-40db-8315-ddcee4111936
2024
Zhang, Lin
e1d600fe-6c28-40db-8315-ddcee4111936
Wang, Peng
9496fb0a-1c17-4b6b-a755-aedf19bb83e5
Zhang, Jason
df7b9fa8-04fd-4085-b74d-c9c1506b974e
Vithana, Krish
f6916e65-2c61-43ab-8ce3-897a2f8b6591
Zhang, Lin
(2024)
The impact of disloyal managers on corporate governance—insights from Corporate Opportunity Waivers.
University of Southampton, Doctoral Thesis, 145pp.
Record type:
Thesis
(Doctoral)
Abstract
In this study, we explore the role of agency problems in firm decisions. We exploit the staggered adoption of corporate opportunity waivers (COW) law, which weakens directors’ and officers’ duty of loyalty, as an external shock to agency conflicts. Using a Difference-in-Differences research design, we examine the changes of payout decision, overall firm value, and the use of accounting conservatism within a sample of U.S. listed entities from 1994 to 2022. We find significant decreases in total payout, share repurchasing, and firm value after the adoption of COW. Nevertheless, the level of accounting conservatism increases after passage of COW. The possible explanation is that firms increase accounting conservatism in response to the negative effect of the COW law.
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The Impact of Disloyal Managers on Corporate Governance—Insights from Corporate Opportunity Waivers
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Published date: 2024
Keywords:
Corporate Opportunity Waiver law, payout policy, accounting conservatism, firm value, information asymmetry, busy board, firm risk
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Local EPrints ID: 497106
URI: http://eprints.soton.ac.uk/id/eprint/497106
PURE UUID: 1d83d844-852f-4879-ad8f-5ea9f9d094c8
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Date deposited: 14 Jan 2025 17:20
Last modified: 08 Feb 2025 03:07
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Author:
Lin Zhang
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