THE ROLE OF TECHNICAL EXPERTISE IN FIRM GOVERNANCE STRUCTURE: EVIDENCE FROM CHIEF FINANCIAL OFFICER CONTRACTUAL INCENTIVES

• 成果类型: Article
• 署名作者: Gore, Angela K.; Matsunaga, Steve; Yeung, P. Eric
• 署名单位: University of Oregon; George Washington University; University System of Georgia; University of Georgia
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.907
• 发表日期: 2011
• 页码: 771-786
• 关键词: chief financial officer; COMPENSATION; financial background; finance committee

摘要

We provide evidence that the presence of technical expertise in firm governance structure reduces reliance on contractual incentives to control the potential agency problem for executives whose responsibilities require specialized knowledge. Specifically, we find that firms with financial expertise in the form of a board finance committee, or a chief executive officer with a financial background, tend to use lower levels of incentive-based compensation for their chief financial officers. Our findings suggest financial experts provide stronger oversight and/or direction with regard to firm financial policies and strategies, thereby allowing firms to reduce reliance on incentive compensation. Our study provides insight into the role of technical expertise and board committees in firm governance, and into the benefits of common functional expertise within top management teams. Copyright (C) 2010 John Wiley & Sons, Ltd.