Working Paper Series
Jochen A. Jungeilges
Globalization of Corporate Covernance: The American Influence on Dismissal Performance Sensitivity of European CEOs
(), Lars Oxelheim
() and Trond Randoy
Abstract: This study examines how globalization of corporate
governance practices influence the risk of European CEOs being dismissed.
We argue that the harsh monitoring of the American corporate governance
system spills over to the rest of the world as a result of this
globalization. We focus on direct and indirect American influence on the
dismissal performance sensitivity among the 250 largest European publicly
listed firms. The indirect influence is assumed to materialize via European
firms cross-listing on U.S. exchanges, whereas the direct influence is
assumed to appear as a result of European firms hiring of American
independent board members. Both sources of influence are hypothesized to
result in increased dismissal performance sensitivity. The empirical
results show a significant increase in the dismissal sensitivity in poorly
performing companies with American board membership whereas no significant
increase is found from cross-listing in the U.S.
Keywords: CEO dismissal; Performance sensitivity; Globalization; Corporate governance; Foreign board membership; Institutional contagion; (follow links to similar papers)
JEL-Codes: G15; G18; G32; M14; M16; M52; (follow links to similar papers)
48 pages, February 12, 2010
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