37 Pages Posted: 11 Aug 2011 Last revised: 10 Oct 2014
Date Written: April 24, 2014
We analyze board-turnover of firms implicated in stock-option backdating to assess the effectiveness of board elections within the corporate governance process. Despite high reelection rates among nominated directors, board-turnover was substantial. Critically, these turnover decisions were 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 inside directors departed though different mechanisms: independent directors primarily were not renominated, while inside directors generally resigned. Finally, directors who were involved in backdating experienced reductions in both the number and prestige of their directorships.
Suggested Citation: Suggested Citation
Bereskin, Frederick L. and Smith, Clifford W., Mechanisms of Board Turnover: Evidence from Backdating (April 24, 2014). Available at SSRN: https://ssrn.com/abstract=1908172 or http://dx.doi.org/10.2139/ssrn.1908172