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We examine the resource provision role of the board of directors in ensuring substantive corporate sustainability practices. Specifically, we examine two channels of resource provision (i.e., the presence of non-executive directors with previous experience in environmental issues—EEDs—and network connections of EEDs) that can affect a firm's ethical and environmental behavior. Using greenhouse gas (GHG) emissions data from FTSE 350 firms, as a measure of environmental performance, we show that the presence of EEDs on the board is associated with lower GHG emissions. Further, firms with better-networked EEDs have better environmental performance. A possible mechanism is that firms with EEDs invest more in environmental technology. These results suggest that, in addition to the traditional role of shareholder value maximization, the board of directors also caters to the interests of wider stakeholders of the firm by facilitating substantive ethical practices.

This paper shows that the likelihood of post-acquisition CEO turnover can act as a constraint on risky acquisition decisions. The acquisition premium in pay decreases by over 50% once the dismissal risk is controlled for. Given a smaller pay premium for undertaking acquisitions and a non-zero risk of dismissal, shareholders are shown to be able to exercise some control over managerial incentives to engage in risky acquisitions through the mechanism for dismissal.

This thesis is comprised of three empirical studies on CEO pay and CEO turnover in the USA. It specifically examines the effects of the market for corporate control and governance on CEO turnover and CEO pay, and the effect of risk of dismissal on CEO pay. Using data on CEO pay, CEO turnover and acquisitions in the US, we analyze the risk of CEO turnover in the period 1992-2010 and the effect of market for corporate control on turnover probability. 31% of the CEOs in the sample are replaced in this period, either for performance related reasons or following takeovers. Post Sarbanes-Oxley act of 2002, the performance sensitivity of turnover is stronger and CEOs face a higher dismissal risk, which indicates partial success of governance regulations in mitigating agency problems. Small and more independent boards are associated with higher likelihood of CEO exit. Takeovers act as external force of discipline and increase the probability of turnover for poor performing CEOs by 129%. These results contribute to the debate on the role of governance regulations in enforcing optimal contracting. Next, we examine the impact of acquisitions on the pay of acquiring CEOs to explore whether acquisitions exacerbate the divergence of interest between shareholders and CEOs. To examine systematic agency problems, we further examine if CEOs are rewarded differentially for shareholder wealth-generating (good) and shareholder wealth-destroying (bad) acquisitions. Controlling for firm size, our estimates suggest that CEOs are paid a 3.5-4% premium in post-acquisition pay, which increases the pay of the median CEO of an acquiring firm in the sample by US$ 173,000. Consistent with the earlier studies by Bliss and Rosen (2001), we find no evidence that post-acquisition premium in CEO pay is conditional upon the ex-post wealth-effect of the acquisition, thereby suggesting possible decoupling of pay and performance following acquisition. Further, our results that acquisition premium in CEO pay can be partially attributed to weak corporate governance is in agreement with managerial power and rent-seeking hypotheses. Controlling for post-acquisition survivor bias, we observe a smaller acquisition premium in CEO pay which may suggest that stronger governance exposes CEOs undertaking bad acquisitions to higher risk of turnover. Average CEO Pay has grown significantly in the last two decades but so has the risk of forced turnover. Most explanations for increased CEO compensation focus on market power - the increased competition in the external CEO market, or entrenchment - rent extraction by CEOs from captured boards. We attempt to provide an alternate explanation for the recent growth in CEO pay. We estimate the compensating differentials in CEO pay for increasing risk of dismissal. Our estimates suggest that CEOs are paid 2-4% premium in pay for a percentage point increase in the risk of dismissal, which is manifest in the form of increased cash payments. The compensating differential is higher in the post- Sarbanes Oxley sub-period (2003-2010). The increasing use of risk-free cash payments to compensate for higher turnover risk may lower the performance sensitivity in CEO pay. We highlight this as a possible inadvertent effect of governance regulations.

Political donations in the UK have been subject to comprehensive disclosure since 2001. We study the data produced as part of this disclosure policy to evaluate the role of private and public political finance over time. Total political donations have grown by 250% since 2001, reaching over £100 million in real terms for the first time in 2019. This increase has been driven by donations from private individuals, who now account for approximately 60% of donations in election years compared to 40-50% up to the late 2010s. Furthermore, ‘superdonors’ (those contributing more than £100,000) have been a prominent driver of the rise, increasing their own share from approximately 36% in 2017 to 46% in 2019. We also show that private donations to Labour fell sharply in the final stages of Jeremy Corbyn’s leadership. Overall, these trends have benefited the Conservative Party, leading to an historic resource gap between the two main parties emerging circa 2019. We calculate that the ‘resource gap’ between parties now stands at approximately £27 million compared to an historic average of £8-10 million (even when taking account of publicly-funded ‘Short’ money provided to the Opposition).

In 2002, an amendment to UK parliamentary regulations removed restrictions on the participation of members of parliament (MPs) in parliamentary proceedings related to their corporate interests. Using this amendment as a quasi-natural experiment, we demonstrate gains in firm value and profitability for firms with prior connections to MPs. These benefits are higher for firms with family ownership and lower accounting transparency. Both firms and politicians to change their behaviour. Post-amendment, firms are more likely to appoint MPs and also reduce political donations. Politicians with corporate connections were more likely to both become members of, and conditional on this, attend meetings of parliamentary select and joint committee. Our results highlight mechanisms of returns from political influence in well-developed institutional contexts.

A large body of literature suggests that CEOs have misaligned incentives to undertake acquisitions in an attempt to increase their pay. This paper shows that the likelihood of post-acquisition CEO turnover can act as a constraint on such incentives. The acquisition premium in pay decreases by 50% if the likelihood of post-acquisition turnover is controlled for. This suggests a significant survivor bias in previous estimates of acquisition premium. Given a smaller pay premium for undertaking acquisitions and non-zero risk of dismissal, a risk-averse agent may not have strong incentives to undertake an acquisition for the marginal pay increase. The likelihood of dismissal seems to carry stronger incentive effects than post-acquisition pay increase.

We show that over the last decade, growing public pressure for board gender diversity and awareness of gender equality issues in the U.S. has manifested in \"seasoned\" female board members accumulating multiple board appointments at a rate faster than seasoned male directors. The larger firms have been the most active in attracting seasoned female directors, at the expense of the smaller firms. This has likely contributed to the smaller firms lagging behind the larger firms in the pursuit of more gender balance. Our evidence is highly consistent with \"supply constraints\", as reflected in high costs of recruiting first-time female directors, which the larger firms manage to avoid and the smaller firms find too costly to incur. Gender quota mandates are likely to expose the smaller firms even more to these costs; however, the absence of mandates may also not be optimal. Given growing public pressure, it may be necessary to mandate that larger firms maintain the ratio of first-time to seasoned female appointments above some level.

This paper examines how the structure of corporate holdings impacts upon the corporate governance mechanisms and outcomes. Using a panel data of 500 large listed Indian âEUR¦firms we compare âEUR¦firms with dispersed equity ownership, and business group âEUR¦firms with cross-holdings and concentrated family ownership, within the same institutional frameworks. Contrary to the popular hypothesis that concentrated shareholding leads to worse corporate governance outcomes, we find that the corporate governance outcomes are similar for both types of âEUR¦firms, even though the incentive alignment mechanisms may be different. The results of this paper suggest that corporate holding structures and governance mechanisms adjusts to optimize value and performance.