The Determinants and Performance Impact of Outside Board Leadership
60 Pages Posted: 17 Mar 2009 Last revised: 14 Jan 2015
Date Written: December 9, 2014
Outside board chairs are more likely in firms that are smaller, have greater stock volatility and R&D intensity, have a lower proportion of inside directors and less institutional ownership, and when CEOs have shorter tenure and lower ownership. We also find the existence of an outside chair associated with geographical and industry norms. An outside chair is positively associated with firm performance, a finding robust to various estimation methods including event study and multivariate analyses incorporating controls for endogeneity, as well as market and accounting measures of performance. We note however, the outside chair-firm performance relationship varies with firm characteristics.
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