"The researchers defined greed as the desire for and pursuit of extraordinary wealth."
New York, June 21 - Greedy CEOs are a bane to a firm and a powerful board, but long tenures and less discretion are vital to keep them in check, says a study.

Although the pursuit of wealth by top managers can lead to lower performance and loss of shareholder value, a powerful board or long CEO tenure can moderate the relationship between greed and shareholder return, the findings showed.

Some CEOs appear to direct more of the firm's resources toward themselves than others and this can occur more when managers have a lot of discretion or have a short tenure, or if the board is weak, said Katalin Takacs Haynes, assistant professor at University of Delaware in the US.

Interestingly, we found that the negative effects of executive greed on shareholder wealth decrease as CEOs experience more time in their role, Haynes added.

For the study, researchers conducted an analysis of over 300 public listed firms from multiple industries, examining stock market returns and dividends and conducting interviews with a set of top executives and an independent panel of experts including academic scholars and senior business executives from a variety of disciplines.

The researchers defined greed as the desire for and pursuit of extraordinary wealth.

The findings will appear in the forthcoming issue of Journal of Management.


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