Board Governance and Managerial Short-term Incentives



This paper examines the relationship between board independence degree and managerial short-term incentives in investment decisions using a game-theoretical framework which is based on the model of Narayanan (1985). Because the model here connects corporate governance by a board and investment decisions by a manager, we can see clearly how the board affects the manager's investment decisions using its wage policy for the manager. According to the results here, although corporate governance by the board can alleviate managerial short-term incentives in investment decisions, it can not solve these kinds of biases completely. Therefore, to accomplish our final target of eliminating managerial short-term incentives in investment decisions, the only way we can do is to make the information between board and manager completely symmetric. In the comparative statics analysis here, we also know that board independence degree may also change as firms' characteristics change when manager has a certain short-term incentive. Therefore, sometimes a board with lower independence degree would also be appropriate. Key words: Board of directors; corporate governance; Investment decisions


Board of directors; corporate governance; Investment decisions

Full Text:




  • There are currently no refbacks.

Copyright (c)

Share us to:   


  • How to do online submission to another Journal?
  • If you have already registered in Journal A, then how can you submit another article to Journal B? It takes two steps to make it happen:

1. Register yourself in Journal B as an Author

  • Find the journal you want to submit to in CATEGORIES, click on “VIEW JOURNAL”, “Online Submissions”, “GO TO LOGIN” and “Edit My Profile”. Check “Author” on the “Edit Profile” page, then “Save”.

2. Submission

  • Go to “User Home”, and click on “Author” under the name of Journal B. You may start a New Submission by clicking on “CLICK HERE”.

We only use three mailboxes as follows to deal with issues about paper acceptance, payment and submission of electronic versions of our journals to databases:;;

 Articles published in Management Science and Engineering are licensed under Creative Commons Attribution 4.0 (CC-BY).


Address:1055 Rue Lucien-L'Allier, Unit #772, Montreal, QC H3G 3C4, Canada.

Telephone: 1-514-558 6138
Http:// Http://

Copyright © 2010 Canadian Research & Development Centre of Sciences and Cultures