In the CEO We Trust: Negative Effects of Trust between the Board and the CEO

Kee-Hong BAE, Sadok EL GHOUL, Zhaoran (Jason) GONG, Omrane GUEDHAMI

Research output: Other Conference ContributionsConference Paper (other)Researchpeer-review

Abstract

Does trust between the board of directors and CEO improve corporate board governance? Contrary to the conventional wisdom that trust improves the performance of all institutions in a society, we find that firms with higher levels of board–CEO trust are less effective. High trust is associated with low CEO pay-performance sensitivity, low CEO turnover-performance sensitivity, and low board meeting attendance. Less board monitoring in turn leads to poor acquisition performance. Our results suggest that in the institutional setting of a board of directors, trust can be too much of a good thing.
Original languageEnglish
Publication statusPublished - 5 Dec 2020
Event2020 CAFM : 15th Conference on Asia-Pacific Financial Markets
- Seoul, Korea, Republic of
Duration: 4 Dec 20205 Dec 2020

Public Lecture

Public Lecture2020 CAFM : 15th Conference on Asia-Pacific Financial Markets
CountryKorea, Republic of
CitySeoul
Period4/12/205/12/20

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