The Effects of CEO Trustworthiness on Directors’ Monitoring and Resource Provision

E. Del Brio
Toru YOSHIKAWA, Singapore Management University
C.E. Connelly, Singapore Management University
Wee Liang TAN, Singapore Management University

Abstract

Because of the importance of board members’ resource provision and monitoring, a substantial body of research has been devoted to ascertaining how directors can be incented to perform their responsibilities. We use social exchange theory to empirically examine how board members’ resource provision and monitoring are affected by their perceptions of the CEOs’ trustworthiness. Our findings suggest that board members’ perceptions of the CEO’s ability, benevolence, and integrity have different effects on the board members’ resource provision and monitoring. Our results further suggest that board members’ governance behaviors are moderated by the board’s performance evaluation practices.