Understanding Corporate Governance Through Learning Models of Managerial Competence
The Harvard Law School Forum on Corporate Governance and Financial Regulation 2014-07-03
The central focus of research in corporate governance has historically been on the problems of controlling managers’ actions. Without minimizing the real-world importance of such control problems, in our paper, Understanding Corporate Governance Through Learning Models of Managerial Competence, which was recently made publicly available on SSRN, we argue that such a focus is incomplete and ignores important factors affecting corporate governance. In particular, it overlooks the crucial element of career concerns: managers care about the inferences that current and future employers draw over time about their abilities from observing their performance.