Abstract
In recent years the demands placed on executives as a consequence of shareholder activism have increased dramatically. This activism poses significant risk to CEOs' tenure and wealth. As a result, CEOs may be more likely to see that their firms' adopt shareholder-friendly strategic initiatives (i.e., initiatives that are generally received positively by the market) in an attempt to pacify shareholder activism and protect their administration. Such behavioral motivation may occur even when objective factors indicate that particular strategic initiatives are not the highest and best use of scarce corporate resources. The adoption of strategic initiatives has been studied extensively through the lenses of institutional theory and rational economic perspectives. In this paper we explore behavioral motivations for adopting strategic initiatives. We predict that the adoption of shareholder friendly initiatives should be more likely when factors affecting the uncertainty of CEO tenure and wealth are pronounced. ...
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