The Determinants and Performance Impact of Outside Board Leadership
Temple University - Department of Accounting
University of Nevada, Las Vegas - Department of Finance
University of Nevada, Reno
Decmber 22, 2011
Using a large panel dataset from 1996 to 2005, we find that having an outside board chair positively and significantly impacts firm performance. Consistent with recent literature on optimal board structures, we find that the costs and benefits of having an outside chair depend on firm characteristics. Specifically, we find that having an outside chair is more valuable when the CEO has greater bargaining power or when monitoring costs to external investors are high. An outside chair however appears to be less valuable in operationally complex firms. Finally, we document that shareholders react favorably to announcements of outside chair appointments.
Number of Pages in PDF File: 70working papers series
Date posted: March 17, 2009 ; Last revised: February 2, 2012
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