Corporate Cultures and Fabricated Boards: Should the Board Structure Be Regulated?
نویسنده
چکیده
This study examines the effects of governance mechanisms on CEO dismissal in different corporate cultures: manipulative (firms sued for financial misreporting) versus normal (non-sued firms). The findings show that, following the discovery of wrongdoings, “seemingly independent” boards are less effective in replacing the CEOs, whereas banks and blockholders increase the likelihood and lead to more prompt CEO dismissal. In underperforming non-sued firms, the presence of blockholders and bank borrowing has no effect on CEO turnover, but more independent boards increase the likelihood of CEO turnover. Corporate culture appears to be an important element in shaping the roles of governance mechanisms. Overall, these findings suggest that there is no need to impose specific percentage of board independence on firms.
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