Tokyo Institute of Technology
2-12-1, W9-49, Ookayama,
Institutional Affiliation: Tokyo Institute of Technology
NBER Working Papers and Publications
|March 2018||Enjoying the Quiet Life: Corporate Decision-making by Entrenched Managers|
with Kotaro Inoue, Sho Watanabe
in Corporate Governance (NBER-TCER-CEPR Conference), Franklin Allen, Shin-ichi Fukuda, Takeo Hoshi, organizers
|September 2017||Enjoying the Quiet Life: Corporate Decision-Making by Entrenched Managers|
with Kotaro Inoue, Sho Watanabe: w23804
In this study, we empirically test “quiet life hypothesis,” which predicts that managers who are subject to weak monitoring from the shareholders avoid making difficult decisions such as risky investment and business restructuring with Japanese firm data. We employ cross-shareholder and stable shareholder ownership as the proxy variables of the strength of a manager’s defense against market disciplinary power. We examine the effect of the proxy variables on manager-enacted corporate behaviors and the results indicate that entrenched managers who are insulated from disciplinary power of stock market avoid making difficult decisions such as large investments and business restructures. However, when managers are closely monitored by institutional investors and independent directors, they tend...
Published: Naoshi Ikeda & Kotaro Inoue & Sho Watanabe, 2017. "Enjoying the quiet life: Corporate decision-making by entrenched managers," Journal of the Japanese and International Economies, .