The Multiple Roles of Generalist on Internal and External Governance Mechanisms

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Abstract

Most governance literature investigate the effects of corporate governance mechanisms on firm outcomes, but neglects which influence variations in the effectiveness of corporate governance mechanisms. This study examines how CEO general human capital affects internal corporate governance (monitoring) and external corporate governance (institutional investors) across firms by developing an human capital approach. Our findings provide that CEO general human capital has a significant effect on corporate governance mechanism even after controlling for CEO characteristics and firms characteristics. Further, we show that generalist CEOs with strong general human capital moderate relations between the status of corporate governance and cash compensations schemes. These results can be helpful to regulators’ decision for governance rules and useful to shareholders that CEO managerial general human capital with his or her marketable bargaining power influence on internal and external corporate governance regardless of governance regulations. Therefore, our findings advance the academic understanding of managerial general human capital effect with bargaining power as well as provide practical implications to regulations.

Author

• Kwangjoo(KJ) Koo, William Paterson University of New Jersey