Empire-building CEOs prepare more informative reports on investment projects when faced with unfriendly boards, research reveals.
When should a board be unfriendly with their chief executive? According to new research, boards should give CEOs a hard time if they suspect he or she is an “empire builder”, willing to launch investment projects that sacrifice firm value but increase their own pay-off. The study also offers a warning about the perils of overboarding.
The report from researchers in the Czech Republic and the US concludes that “unfriendly” boards are likely to receive better information from CEOs on investments, while “friendly” boards are presented with details that are just convincing enough to dissuade members from doing their own digging. Th
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