Omitted Agency costs in Preemptive Voluntary CEO Departures

Much like the Newton’s first law of physics, the first law of the agency theory is to assume that CEOs are likely to entrench themselves unless a force acts to remove or recruit them. Given that the principal-agent relationship generates conflicts of interest between the CEOs and the shareholders, corporate governance focuses on balancing retention and termination and the boards of directors (BODs) time their actions and inactions. This paper...