Disloyal Managers and Shareholders' Wealth

• 成果类型: Article
• 署名作者: Fich, Eliezer M.; Harford, Jarrad; Tran, Anh L.
• 署名单位: Drexel University; University of Washington; University of Washington Seattle; City St Georges, University of London
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhac070
• 发表日期: 2023
• 页码: 1837
• 关键词: CORPORATE GOVERNANCE; incentive contracts; AGREEMENTS; OWNERSHIP; matter; STOCK; INVESTMENT; INNOVATION; SALIENCE; mobility

摘要

A duty of loyalty prohibits fiduciaries from appropriating business opportunities from their companies. Starting in 2000, Delaware, followed by several other states, allowed boards to waive their duty. We show that public firms covered by waiver laws invest less in R&D, produce fewer and less valuable patents, and exhibit abnormally high inventor departures. Remaining innovation activities contribute less to firm value, a fact confirmed by the market reaction when firms reveal their curtailed internal growth opportunities by announcing acquisitions. Consistent with the laws' intent to provide contracting flexibility to emerging firms, we find evidence of positive impacts for small firms.