We develop a dynamic model of firm in which cash management is partially delegated to self-interested manager. Shareholders trade off the cost dismissing manager with managerial discretion over use liquid funds. An improvement corporate governance quality may have positive or negative effect on levels and values balances, depending source improvement. While reduction entrenchment results lower ...

This paper investigates whether the family status of a company’s top officer affects managerial replacement decisions in UK firms. We report evidence that family firms are characterized by higher levels of board control and weak internal governance in the form of independent company board structures. Consistent with a managerial entrenchment hypothesis, we find evidence that family CEOs are les...

We examine the relation between corporate governance and firms' information environments. We use the passage of state antitakeover laws in the U.S. as a source of exogenous variation in an important governance mechanism to identify changes in firms' information environments. We find that information asymmetry and private information gathering decreased and that financial statement informativene...

Shareholder delegation of the power to fire the CEO to the board of directors is central to corporate governance. While the board ideally acts as desired by shareholders, board entrenchment may insulate a poorly performing manager from shareholders agitating for her removal. The conventional ‘costly firing’ model of managerial entrenchment views this protection from shareholders as purely negat...

ABSTRACT Many economic and informational problems associated with corporate IT spending can be attributed to managerial rent-seeking. IT managers with misaligned incentives and budgetary discretion often entrench themselves through their non-value-maximizing investment decisions. In order to boost their bargaining power in future contract renegotiation, they invest excessively in IT projects th...

We describe how managers can entrench themselves by making manager-specific investments that make it costly for shareholders to replace them. By making manager-specific investments. managers can reduce the probability of being replaced extract higher wages and larger perquisites from shareholders. and obtain more latitude in determining corporate strategy. Our model of entrenchment has empirica...

Some economic and informational problems associated with organizational information technology (It) spending may be attributed to managerial rent-seeking. Because of the unavoidable incompleteness of labor contracts, managers with misaligned incentives and budgetary discretion could entrench themselves through their non-value-maximizing adoption decisions. In order to boost their bargaining pow...