|
|
|
|
||||
|
||||
Why Do Firms Appoint CEOs as Outside Directors?Rüdiger FahlenbrachEcole Polytechnique Fédérale de Lausanne; Swiss Finance Institute Angie LowNanyang Technological University - Division of Banking & Finance Rene M. StulzOhio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI) July 2008 Fisher College of Business Working Paper No. 2008-03-009 Charles A. Dice Center for Research in Financial Economics Working Paper No. 2008-10 Abstract: We examine the determinants of appointments of outside CEOs to boards and how these appointments impact the appointing companies. We find that CEOs are most likely to join boards of large established firms that are geographically close, pursue similar financial and investment policies, and have comparable governance mechanisms to their own firms. It is also more likely that CEOs join firms with low insider ownership and firms with boards that already have other CEO directors. Except for the case of board interlocks, there is no evidence supporting the view that CEO directors have any impact on the appointing firm during their tenure, either positively or negatively. Appointments of CEO directors do not have a significant impact on the appointing firm's operating performance, its decision-making, the compensation of its CEO, or on the monitoring of management by the board. However, operating performance drops significantly for CEO director appointments when the CEO of the appointing firm already sits on the board of the appointee's firm.
Number of Pages in PDF File: 59 Keywords: Director independence, new director appointment, director influence, quiet life JEL Classification: G30, G34 working papers seriesDate posted: July 17, 2008Suggested CitationContact Information
|
|
|||||||||||||||||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo3 in 0.500 seconds
