Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323975 
Year of Publication: 
2012
Citation: 
[Journal:] Journal of Management Studies [ISSN:] 1467-6486 [Volume:] 49 [Issue:] 4 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2012 [Pages:] 718-742
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
Recently, microfinance has been coming under public and media attacks. The microcredit crisis following from microfinance-induced suicides in 2010 in the Indian state of Andhra Pradesh indicates that weak corporate governance and imprudent risk taking have far-reaching consequences. Yet, analyses of corporate governance mechanisms among microfinance institutions (MFIs) remain underdeveloped. As a response, this study examines the impact of CEO power on MFI risk taking by deriving explicit predictions of this effect from a characterization of the microfinance industry. Based on a sample of 280 microfinance institutions, our results suggest that powerful CEOs of microfinance non-governmental organizations (NGOs) have more decision-making freedom than powerful CEOs of other types of MFIs. This induces them to make more extreme decisions that increase risk. Furthermore, the decision-making freedom powerful CEOs have in NGOs appears to lead to worse decisions, because the presence of powerful CEOs in microfinance NGOs is associated with lower performance.
Published Version’s DOI: 
Document Type: 
Article
Document Version: 
Accepted Manuscript (Postprint)
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