Transaction cost economics and corporate governance: the case of CEO age and financial stake |
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| Authors: | Patrick L. McClelland Jonathan P. O'Brien |
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| Affiliation: | 1. School of Business and Management, American University of Sharjah, Sharjah, UAE;2. Lally School of Management and Technology, Rensselaer Polytechnic Institute, Troy, NY, USA |
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| Abstract: | ![]()
Agency theory provides a valuable lens for understanding the role and importance of many varied governance mechanisms. We argue that transaction cost economics (TCE) provides a complementary theoretical lens for studying corporate governance because it illuminates the various contingencies that moderate the importance of alternative governance mechanisms. Using agency theory, we argue and find evidence that the confluence of advancing CEO age and large CEO stock holdings will cause the CEO to become overly risk‐averse. Moreover, we use TCE to more fully explicate the ensuing performance consequences as well as the contextual factors that critically moderate this relationship. Copyright © 2010 John Wiley & Sons, Ltd. |
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