Review of Quantitative Finance and Accounting

, Volume 39, Issue 3, pp 361–382

An agency-based perspective on the performance consequences of COO adoption

Original Research

DOI: 10.1007/s11156-011-0255-y

Cite this article as:
Vafeas, N. & Vlittis, A. Rev Quant Finan Acc (2012) 39: 361. doi:10.1007/s11156-011-0255-y

Abstract

The aim of this study is to explain the performance consequences of the adoption of a Chief Operating Officer (COO) position by drawing from agency theory. Although, prior research has documented a performance penalty associated with the use of this position, we currently have an incomplete understanding of the factors explaining this penalty. This study suggests that the delegation of CEO decision rights to the COO is explained by information transfer and agency considerations. Largely consistent with agency theory, our empirical analysis suggests information transfer considerations are related to the likelihood of COO adoption, while CEO ownership and board characteristics mitigate the related performance penalty.

Keywords

Decision rights delegation Information transfer Agency costs Chief operating officer 

JEL Classification

G34 

Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.Department of Public and Business AdministrationUniversity of CyprusNicosiaCyprus
  2. 2.Department of AccountingUniversity of NicosiaNicosiaCyprus

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