Agency Theory Revisited: CEO Return and Shareholder Interest Alignment
Year: 2010
Type: article
Abstract: Agency theory suggests that managerial mischief may occur when the interests of owners and managers diverge and that a solution to this agency problem is alignment of owner and agent interests through agent compensation and equity ownership. We develop the theoretical concept of CEO return and measure and estimate financial alignment as the relationship between CEO and shareholder returns. Our results, based on this new conceptualization and corresponding measurement, suggest stronger alignment than reported in previous work. The magnitude of this alignment is associated with subsequent firm performance, but in ways not clearly articulated or tested in prior research.
Source: Academy of Management Journal
Institutions: University of South Carolina, University of Wisconsin–Madison
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3121665884