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Do Boards Of Directors Affect CEO Behavior? Evidence From Payout Decisions

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  • Artem E. Anilov

    (National Research University Higher School of Economics)

  • Irina V. Ivashkovskaya

    (National Research University Higher School of Economics)

Abstract

We test the ability of boards of directors to eliminate the negative impact of CEO behavior on payout policy. We contribute to the literature by testing the ability of boards to influence CEO payout propensity. First, we show that if the compensation scheme of a CEO does not stimulate him or her to take more risk, the level of payout will be higher. Second, by introducing an index of corporate governance quality we show that corporate governance tools may reduce the negative effects of CEO risk preferences: in companies with good corporate governance, the risk preferences of the CEO do not affect payout decisions. Third, based on a set of specifications for risk preferences, we show how the impact of CEO attitudes to risk influences the types of payouts

Suggested Citation

  • Artem E. Anilov & Irina V. Ivashkovskaya, 2018. "Do Boards Of Directors Affect CEO Behavior? Evidence From Payout Decisions," HSE Working papers WP BRP 69/FE/2018, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:69/fe/2018
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    More about this item

    Keywords

    behavioral finance; corporate governance; payout policy.;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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