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http://ssrn.com/abstract=2002629
 
 

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Old Captains at the Helm: Chairman Age and Firm Performance


Urs Waelchli


University of Rochester - Simon Business School

Jonas Zeller


University of Berne – Institute for Financial Management

December 12, 2012

Journal of Banking and Finance, Forthcoming

Abstract:     
This paper examines whether the chairmen of the board (COBs) impose their life cycles on the firms over which they preside. Using a large sample of unlisted firms, we find a robust negative relation between COB age and firm performance. COBs age much like ‘ordinary’ people. Their cognitive abilities deteriorate, and they experience significant shifts in motivation. Deteriorating cognitive abilities are the main driver of the performance effect that we observe. The results imply that succession planning problems in unlisted firms are real. Mandatory retirement age clauses cannot solve these problems.

Number of Pages in PDF File: 57

Keywords: age, chairman of the board, cognitive abilities, firm performance, corporate governance, unlisted firms

JEL Classification: G30, L20

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Date posted: February 12, 2012 ; Last revised: February 20, 2013

Suggested Citation

Waelchli, Urs and Zeller, Jonas, Old Captains at the Helm: Chairman Age and Firm Performance (December 12, 2012). Journal of Banking and Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2002629 or http://dx.doi.org/10.2139/ssrn.2002629

Contact Information

Urs Waelchli (Contact Author)
University of Rochester - Simon Business School ( email )
Rochester, NY 14627
United States
Jonas Zeller
University of Berne – Institute for Financial Management ( email )
Engehaldenstrasse 4
Bern, 3012
Switzerland
HOME PAGE: http://www.ifm.unibe.ch
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