دانلود رایگان مقاله انگلیسی ناظر بی نظیر: حاکمیت شرکتی در زمان توانایی مدیریت ارزیابی - الزویر 2018

ABSTRACT

An important aspect of corporate governance is the assessment of managers. When managers vary in ability, determining who is good and who is not is vital. Moreover, knowing they will be assessed can lead those being assessed to behave in ways that make them appear better. Such signal-jamming behavior can be beneficial (e.g., an executive works harder on behalf of shareholders) or harmful (e.g., the behavior is myopic, boosting shortterm performance at the expense of long-term success). In standard models of assessment, it is assumed those doing the assessing behave according to Bayes Theorem. But what if the assessors suffer from one of many welldocumented cognitive biases that makes them less-than-perfect Bayesians? This paper begins an exploration of that issue by considering the consequence of one such bias, the base-rate fallacy, for two of the canonical assessment models: career-concerns and optimal monitoring and replacement. Although firms can suffer due to the base-rate fallacy, they can also benefit from this bias.

5. Discussion and conclusions

As noted at the end of the last section in connection to Proposition 10, an alternative interpretation of at least some of these models is not that the employers (boards, shareholders) suffer from a cognitive bias, but instead differ (perhaps relative to past situations) in the precision of their prior information. If their prior knowledge is less precise, then necessarily more weight is put on current signals. As suggested in connection to Proposition 10, this can be useful for explaining various trends in corporate governance.

The analysis could also arguably be used cross-sectionally or to explain differences across countries. For example, in a new industry, in which no one has much of a track record, priors are going to be imprecise and more weight placed on current signals. All else equal, this suggests that executives in new industries might work harder, face greater scrutiny, and be dismissed with higher probabilities than executives in established industries. Likewise, if in one country, the business community is very tight (perhaps because most of its leaders attended the same few universities or institutions), then priors will be precise, executives will correspondingly feel less pressure to work hard, face less scrutiny, and enjoy more secure positions, at least relative to executives in a country with a less tight business community. Of course, if the work that executives do is myopic signal jamming, then firms in old industries or with leaders from tight business communities might have an advantage vis-á-vis those in new industries or with leaders from more open business communities.