Essays on corporate governance and its influence on firm's strategy

Abstract

This thesis studies the effect of Corporate Governance at solving agency problem between managers and shareholders. In a stylized way, managers decisions are key for company's success, but their preferences typically differ from shareholders. It is, then, necessary to understand the mechanisms aligning manager's interests with shareholders' ones. This work focuses first on the role played by one of this mechanisms: a Code of Best Practice. On this topic, we study the effect that the adoption of a Code of Best Practice has on manager's incentives and the optimal Code that a regulator concerned with shareholders' wealth should design. We extend the previous analysis to allow for a market of managers and shareholders, in order to understand the effects of Codes in competitive environments. Finally, we consider an extension of the concept of corporate governance by analyzing situations where employees influence manager's decisions, and we study how this affects manager-sharehol