CEO Power and Firm Opacity

KwangJoo Koo; Jonghwan Kim

doi:10.1080/13504851.2018.1497841

CEO Power and Firm Opacity

KwangJoo Koo, Jonghwan Kim

A&F Accounting & Finance

Pennsylvania State University - Erie

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Abstract

This paper examines the association between CEO power and firm opacity. We discuss the entrenchment and managerial power theories to develop a coherent hypothesis that captures 10 a negative relationship. To investigate the relationship, we use CEO pay slice (CPS) and opacity index as proxies for CEO power and information environment, respectively. With alternate model specifications, we consistently find that firm opacity is positively associated with CPS. With the findings, we conclude that powerful CEOs pursue greater firm opacity–leading to poorer information environments–to hide, if any, agency issues or poor firm performance.

Original language	English
Journal	Applied Economics Letters
Early online date	12 Jul 2018
DOIs	https://doi.org/10.1080/13504851.2018.1497841
Publication status	Published - 2018

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CEO power opacityAccepted author manuscript, 53.3 KB

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abstract = "This paper examines the association between CEO power and firm opacity. We discuss the entrenchment and managerial power theories to develop a coherent hypothesis that captures 10 a negative relationship. To investigate the relationship, we use CEO pay slice (CPS) and opacity index as proxies for CEO power and information environment, respectively. With alternate model specifications, we consistently find that firm opacity is positively associated with CPS. With the findings, we conclude that powerful CEOs pursue greater firm opacity–leading to poorer information environments–to hide, if any, agency issues or poor firm performance.",

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AB - This paper examines the association between CEO power and firm opacity. We discuss the entrenchment and managerial power theories to develop a coherent hypothesis that captures 10 a negative relationship. To investigate the relationship, we use CEO pay slice (CPS) and opacity index as proxies for CEO power and information environment, respectively. With alternate model specifications, we consistently find that firm opacity is positively associated with CPS. With the findings, we conclude that powerful CEOs pursue greater firm opacity–leading to poorer information environments–to hide, if any, agency issues or poor firm performance.

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CEO Power and Firm Opacity

Abstract

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