Mechanisms of Board Turnover: Evidence from Backdating
Frederick L. Bereskin
University of Delaware
Clifford W. Smith Jr.
Simon Graduate School of Business, University of Rochester
February 28, 2014
We analyze board-turnover of firms implicated in stock-option backdating to assess the effectiveness of board elections. Despite high reelection rates among nominated directors, board-turnover is substantial. Critically, these turnover decisions are affected by the anticipated outcome of a potential shareholder vote. Thus, reelection rates are of limited value in assessing the effectiveness of shareholder voting. Independent and management directors depart though different mechanisms: independent directors primarily are not renominated, while management directors generally resign. Finally, directors who are involved in backdating experience reductions in both the number and prestige of their directorships.
Number of Pages in PDF File: 38working papers series
Date posted: August 11, 2011 ; Last revised: March 2, 2014
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