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CEO power and firm opacity

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  • KwangJoo (KJ) Koo
  • Jonghwan (Simon) Kim

Abstract

This paper examines the association between CEO power and firm opacity. We discuss the entrenchment and managerial power theories to develop a coherent hypothesis that captures a negative relationship. To investigate the relationship, we use CEO pay slice (CPS) and opacity index as proxies for CEO power and information environment, respectively. With alternate model specifications, we consistently find that firm opacity is positively associated with CPS. With the findings, we conclude that powerful CEOs pursue greater firm opacity–leading to poorer information environments–to hide, if any, agency issues or poor firm performance.

Suggested Citation

  • KwangJoo (KJ) Koo & Jonghwan (Simon) Kim, 2019. "CEO power and firm opacity," Applied Economics Letters, Taylor & Francis Journals, vol. 26(10), pages 791-794, June.
    • Handle: RePEc:taf:apeclt:v:26:y:2019:i:10:p:791-794
    DOI: 10.1080/13504851.2018.1497841
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    Cited by:

    1. James J. Cordeiro & Giorgia Profumo & Ilaria Tutore, 2021. "Family ownership and stockholder reactions to environmental performance disclosure: A test of secondary agency relationships," Business Strategy and the Environment, Wiley Blackwell, vol. 30(4), pages 2091-2107, May.
    2. Brodmann, Jennifer & Hossain, Ashrafee & Singhvi, Meghna, 2022. "Chief executive officer power and board gender diversity," Finance Research Letters, Elsevier, vol. 44(C).
    3. Leilei Gu & Jinyu Liu & Yuchao Peng, 2022. "Locality Stereotype, CEO Trustworthiness and Stock Price Crash Risk: Evidence from China," Journal of Business Ethics, Springer, vol. 175(4), pages 773-797, February.

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