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An agency-based perspective on the performance consequences of COO adoption

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  • Nikos Vafeas

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  • Adamos Vlittis

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    Abstract

    The aim of this study is to explain the performance consequences of the adoption of a Chief Operating Officer (COO) position by drawing from agency theory. Although, prior research has documented a performance penalty associated with the use of this position, we currently have an incomplete understanding of the factors explaining this penalty. This study suggests that the delegation of CEO decision rights to the COO is explained by information transfer and agency considerations. Largely consistent with agency theory, our empirical analysis suggests information transfer considerations are related to the likelihood of COO adoption, while CEO ownership and board characteristics mitigate the related performance penalty. Copyright Springer Science+Business Media, LLC 2012

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    File URL: http://hdl.handle.net/10.1007/s11156-011-0255-y
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    Bibliographic Info

    Article provided by Springer in its journal Review of Quantitative Finance and Accounting.

    Volume (Year): 39 (2012)
    Issue (Month): 3 (October)
    Pages: 361-382

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    Handle: RePEc:kap:rqfnac:v:39:y:2012:i:3:p:361-382

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    Web page: http://springerlink.metapress.com/link.asp?id=102990

    Related research

    Keywords: Decision rights delegation; Information transfer; Agency costs; Chief operating officer; G34;

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