The Managerial Thesis Revised: Independent Directors and the CEO 'Directorate'

Abstract:     
This paper makes two claims. The first posits that CEOs, active and retired, have disproportionately filled the independent director positions mandated by Sarbanes-Oxley and the private exchange reforms. The second builds from this observation: Corporate control has shifted from focal firm managerial teams to a CEO-inter-corporate directorate. To test these hypothesis, we examine the board demographics of those publicly-traded corporations whose CEOs are members of The Business Roundtable, the premier lobbying organization representing the interests of U.S. corporate managers. We constructed our hypotheses to resolve conflicting assessments among agency theorists and corporate strategy scholars on independent directors' promised redemptive effects for resolving issues of excessive CEO pay and reconciling CEO pay for performance.

Keywords: corporate governance, CEOs, boards of directors

JEL Classifications: G30, G34, K22, M10

Working Paper Series