Abstract
This study investigates whether trust between a corporation’s board chair and the CEO affects firm performance. After using a unique survey data set of regional trustworthiness from China to measure this trust, we find a positive relationship between trust and the performance of Chinese companies from 2000 to 2016. Additional test results suggest that the relationship is causal. Further results show that the positive trust-performance effect is more evident for firms with greater advisory needs and boards that can deliver high-quality advice. Finally, we find supporting evidence to our conjecture that the Chair–CEO trust increases firm value by improving the board advisory results, including value-adding decisions of R&D and merger and acquisition.
| Original language | English |
|---|---|
| Pages (from-to) | 163–198 |
| Number of pages | 36 |
| Journal | Australian Journal of Management |
| Volume | 47 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - Feb 2022 |
| Externally published | Yes |
Keywords
- Advisory role
- firm performance
- merger and acquisition
- R&D
- social trust