CEO trustworthiness and corporate governance
| Monitoring structure | Monitoring activities | CEO incentive alignment | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | |
| Bd_Ind | Bd_Female | Bd_Size | Bd_IntM | Bd_RG | Bd_Meet | Moni_Meet | CEO_Incent | CEO_Owner | |
| Trust_CEO | −0.008*** (0.002) | −0.003** (0.001) | 0.084** (0.043) | −0.252*** (0.086) | −0.091** (0.045) | −0.475*** (0.177) | −0.320*** (0.113) | −0.006* (0.003) | −0.321*** (0.105) |
| Firmsize | −0.014*** (0.002) | 0.002 (0.001) | 0.860*** (0.039) | −0.285*** (0.082) | 0.159*** (0.044) | −0.045 (0.216) | 0.040 (0.130) | 0.024*** (0.003) | −0.454*** (0.092) |
| Bus_Seg | 0.003*** (0.001) | −0.000 (0.001) | 0.008 (0.013) | 0.068*** (0.025) | 0.014 (0.011) | −0.010 (0.054) | −0.007 (0.036) | 0.000 (0.001) | −0.063** (0.032) |
| ROE | 0.001 (0.002) | 0.004*** (0.001) | −0.031 (0.041) | 0.077 (0.080) | 0.022 (0.028) | −0.070 (0.131) | −0.047 (0.082) | 0.005* (0.003) | 0.037 (0.089) |
| Return | 0.000 (0.001) | −0.001 (0.001) | −0.010 (0.022) | −0.065 (0.052) | 0.038** (0.019) | −0.120* (0.066) | −0.105** (0.043) | 0.007*** (0.002) | 0.046 (0.051) |
| BigN | −0.004 (0.004) | 0.006** (0.003) | −0.141* (0.085) | 0.256 (0.196) | 0.106 (0.071) | 0.030 (0.193) | −0.044 (0.128) | 0.011 (0.010) | −0.275 (0.284) |
| BM | 0.016*** (0.003) | 0.005** (0.002) | −0.170*** (0.066) | −0.082 (0.140) | −0.049 (0.071) | −0.184 (0.224) | −0.163 (0.146) | −0.042*** (0.005) | 0.168 (0.143) |
| Leverage | 0.007 (0.006) | 0.000 (0.004) | 0.257** (0.124) | −0.350 (0.263) | 0.292** (0.130) | −1.216** (0.547) | −0.582* (0.307) | −0.056*** (0.013) | 0.861*** (0.282) |
| Firm_Age | 0.000 (0.000) | 0.001*** (0.000) | 0.025*** (0.008) | 0.018 (0.015) | −0.022 (0.015) | −0.206 (0.166) | −0.099 (0.123) | 0.000 (0.000) | 0.040 (0.066) |
| RD | 0.027 (0.031) | −0.019 (0.022) | 2.697*** (0.597) | −0.668 (1.302) | −0.205 (0.582) | −0.600 (2.162) | 0.142 (1.329) | 0.135** (0.061) | −3.325*** (1.181) |
| Returns_Std | 0.201** (0.099) | −0.082 (0.061) | −17.978*** (1.961) | 5.517 (4.045) | −5.114*** (1.837) | 27.581*** (8.633) | 12.846** (5.427) | 0.131 (0.210) | 0.326 (4.296) |
| Insti_Owner | 0.005 (0.005) | 0.008** (0.004) | −0.425*** (0.096) | 0.315* (0.187) | 0.082 (0.102) | 0.167 (0.381) | 0.072 (0.244) | 0.021*** (0.007) | −0.980*** (0.201) |
| CEO_Overconf | −0.013*** (0.002) | 0.005*** (0.002) | 0.137*** (0.044) | 0.010 (0.090) | −0.050 (0.041) | −0.229 (0.184) | −0.136 (0.114) | 0.068*** (0.004) | −0.434*** (0.111) |
| CEO_Age | −0.001** (0.000) | −0.000** (0.000) | 0.009* (0.006) | 0.010 (0.012) | 0.005 (0.005) | 0.027 (0.019) | 0.020 (0.012) | 0.000 (0.000) | 0.086*** (0.014) |
| CEO_Female | 0.012* (0.006) | 0.064*** (0.005) | −0.454*** (0.131) | −0.241 (0.218) | −0.045 (0.088) | −1.715* (0.941) | −0.810 (0.525) | −0.010 (0.010) | −0.155 (0.453) |
| CEO_Tenure | 0.000 (0.000) | −0.000** (0.000) | −0.016*** (0.004) | 0.002 (0.008) | 0.006 (0.004) | −0.032* (0.018) | −0.022* (0.012) | 0.002*** (0.000) | 0.105*** (0.015) |
| Observations | 16,201 | 16,201 | 16,201 | 9,643 | 5,306 | 4,385 | 4,385 | 16,162 | 12,854 |
| CEO Age Group | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Firm FE | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Year FE | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Adj./Pseudo R2 | 0.709 | 0.720 | 0.811 | 0.263 | 0.954 | 0.512 | 0.569 | 0.635 | 0.804 |
| Monitoring structure | Monitoring activities | CEO incentive alignment | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | |
| Bd_Ind | Bd_Female | Bd_Size | Bd_IntM | Bd_RG | Bd_Meet | Moni_Meet | CEO_Incent | CEO_Owner | |
| −0.008*** (0.002) | −0.003** (0.001) | 0.084** (0.043) | −0.252*** (0.086) | −0.091** (0.045) | −0.475*** (0.177) | −0.320*** (0.113) | −0.006* (0.003) | −0.321*** (0.105) | |
| Firmsize | −0.014*** (0.002) | 0.002 (0.001) | 0.860*** (0.039) | −0.285*** (0.082) | 0.159*** (0.044) | −0.045 (0.216) | 0.040 (0.130) | 0.024*** (0.003) | −0.454*** (0.092) |
| Bus_Seg | 0.003*** (0.001) | −0.000 (0.001) | 0.008 (0.013) | 0.068*** (0.025) | 0.014 (0.011) | −0.010 (0.054) | −0.007 (0.036) | 0.000 (0.001) | −0.063** (0.032) |
| ROE | 0.001 (0.002) | 0.004*** (0.001) | −0.031 (0.041) | 0.077 (0.080) | 0.022 (0.028) | −0.070 (0.131) | −0.047 (0.082) | 0.005* (0.003) | 0.037 (0.089) |
| Return | 0.000 (0.001) | −0.001 (0.001) | −0.010 (0.022) | −0.065 (0.052) | 0.038** (0.019) | −0.120* (0.066) | −0.105** (0.043) | 0.007*** (0.002) | 0.046 (0.051) |
| BigN | −0.004 (0.004) | 0.006** (0.003) | −0.141* (0.085) | 0.256 (0.196) | 0.106 (0.071) | 0.030 (0.193) | −0.044 (0.128) | 0.011 (0.010) | −0.275 (0.284) |
| BM | 0.016*** (0.003) | 0.005** (0.002) | −0.170*** (0.066) | −0.082 (0.140) | −0.049 (0.071) | −0.184 (0.224) | −0.163 (0.146) | −0.042*** (0.005) | 0.168 (0.143) |
| Leverage | 0.007 (0.006) | 0.000 (0.004) | 0.257** (0.124) | −0.350 (0.263) | 0.292** (0.130) | −1.216** (0.547) | −0.582* (0.307) | −0.056*** (0.013) | 0.861*** (0.282) |
| Firm_Age | 0.000 (0.000) | 0.001*** (0.000) | 0.025*** (0.008) | 0.018 (0.015) | −0.022 (0.015) | −0.206 (0.166) | −0.099 (0.123) | 0.000 (0.000) | 0.040 (0.066) |
| RD | 0.027 (0.031) | −0.019 (0.022) | 2.697*** (0.597) | −0.668 (1.302) | −0.205 (0.582) | −0.600 (2.162) | 0.142 (1.329) | 0.135** (0.061) | −3.325*** (1.181) |
| Returns_Std | 0.201** (0.099) | −0.082 (0.061) | −17.978*** (1.961) | 5.517 (4.045) | −5.114*** (1.837) | 27.581*** (8.633) | 12.846** (5.427) | 0.131 (0.210) | 0.326 (4.296) |
| Insti_Owner | 0.005 (0.005) | 0.008** (0.004) | −0.425*** (0.096) | 0.315* (0.187) | 0.082 (0.102) | 0.167 (0.381) | 0.072 (0.244) | 0.021*** (0.007) | −0.980*** (0.201) |
| CEO_Overconf | −0.013*** (0.002) | 0.005*** (0.002) | 0.137*** (0.044) | 0.010 (0.090) | −0.050 (0.041) | −0.229 (0.184) | −0.136 (0.114) | 0.068*** (0.004) | −0.434*** (0.111) |
| CEO_Age | −0.001** (0.000) | −0.000** (0.000) | 0.009* (0.006) | 0.010 (0.012) | 0.005 (0.005) | 0.027 (0.019) | 0.020 (0.012) | 0.000 (0.000) | 0.086*** (0.014) |
| CEO_Female | 0.012* (0.006) | 0.064*** (0.005) | −0.454*** (0.131) | −0.241 (0.218) | −0.045 (0.088) | −1.715* (0.941) | −0.810 (0.525) | −0.010 (0.010) | −0.155 (0.453) |
| CEO_Tenure | 0.000 (0.000) | −0.000** (0.000) | −0.016*** (0.004) | 0.002 (0.008) | 0.006 (0.004) | −0.032* (0.018) | −0.022* (0.012) | 0.002*** (0.000) | 0.105*** (0.015) |
| Observations | 16,201 | 16,201 | 16,201 | 9,643 | 5,306 | 4,385 | 4,385 | 16,162 | 12,854 |
| CEO Age Group | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Firm FE | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Year FE | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Adj./Pseudo | 0.709 | 0.720 | 0.811 | 0.263 | 0.954 | 0.512 | 0.569 | 0.635 | 0.804 |
Note(s): This table presents the results of a multivariate analysis of how CEOs' facial trustworthiness affects board monitoring intensity. We include year and firm fixed effects, as expressed in Eq. (1). Columns (1) to (5) report results for the proxies of monitoring structure including Bd_Ind, Bd_Female, Bd_Size, Bd_IntM, and Bd_RG, respectively. Columns (6) and (7) present results for the proxies of monitoring activities including Bd_Meet and Moni_Meet, respectively. Columns (8) and (9) present results for the proxies of CEO incentive alignment including CEO_Incent and CEO_Owner, respectively. See Appendix for variable definitions. Robust standard errors are clustered at the year and firm level. The standard errors are reported in parentheses. ***, ** and * indicates p-values of 1, 5 and 10%, respectively
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