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

95 Scopus citations

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

ASJC Scopus subject areas

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

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