Me or we: The effects of CEO organizational identification on agency costs

Steven Boivie, Donald Lange, Michael L. McDonald, James D. Westphal

Research output: Contribution to journalArticle

83 Citations (Scopus)

Abstract

The corporate governance literature on potential remedies for the agency problem has focused largely on external control mechanisms, especially board independence. We instead consider how an internal, psychological factor - CEO organizational identification - may influence the extent to which firms incur agency costs, including those entailed by the decoupling of CEO pay and perquisites from firm performance. Our theory and findings explain why a CEO with high organizational identification may avoid pursuit of personal gains that can harm the firm he or she leads and its image. We further show how board independence is less likely to reduce agency costs when CEO organizational identification is high.

Original languageEnglish (US)
Pages (from-to)551-576
Number of pages26
JournalAcademy of Management Journal
Volume54
Issue number3
DOIs
StatePublished - Jun 1 2011

Fingerprint

Costs
Agency costs
Chief executive officer
Organizational identification
Board independence
Psychological factors
Firm performance
Remedies
Agency problems
Decoupling
Corporate governance
CEO pay
Control mechanism

ASJC Scopus subject areas

  • Business and International Management
  • Management of Technology and Innovation
  • Strategy and Management
  • Business, Management and Accounting(all)

Cite this

Me or we : The effects of CEO organizational identification on agency costs. / Boivie, Steven; Lange, Donald; McDonald, Michael L.; Westphal, James D.

In: Academy of Management Journal, Vol. 54, No. 3, 01.06.2011, p. 551-576.

Research output: Contribution to journalArticle

Boivie, Steven ; Lange, Donald ; McDonald, Michael L. ; Westphal, James D. / Me or we : The effects of CEO organizational identification on agency costs. In: Academy of Management Journal. 2011 ; Vol. 54, No. 3. pp. 551-576.
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