[2020년 제 5차] In the CEO We Trust: Negative Effects of Trust between the Board and the CEO
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2020-12-11
Does trust between the board of directors and CEO improve corporate board governance? Contrary to the
conventional wisdom that trust improves the performance of all institutions in a society, we find that firms
with higher levels of board–CEO trust are less effective. High trust is associated with low CEO payperformance
sensitivity, low CEO turnover-performance sensitivity, and low board meeting attendance.
Less board monitoring in turn leads to poor acquisition performance. Our results suggest that in the
institutional setting of a board of directors, trust can be too much of a good thing.
