Agency Conflicts for Outside Directors During CEO Selection

The Journal of Accounting and Finance. Vol. 15, Issue 6, pp. 17-45, 2015

Posted: 28 Sep 2013 Last revised: 2 Aug 2018

Date Written: May 13, 2015

Abstract

This paper shows outside directors have an increased chance of obtaining new positions (CEO, COB, directorships) during a CEO turnover year in firms that hire a CEO externally. The new positions are determined by outside directors’ CEO hiring source choice (internal or external), not their performance; the opposite is true for inside directors. Further, outside director representation on a board only predicts an external hire if at least one outside director gains a new position while hiring externally. Finally, only firms with outside directors that gain new positions while hiring externally experience cash flow and stock return losses.

Note: © 2013 James S. Ang and Gregory L. Nagel

Keywords: CEO, outside directors, agency conflicts

JEL Classification: G30, G32, G34, M41, M51

Suggested Citation

Nagel, Gregory Leo, Agency Conflicts for Outside Directors During CEO Selection (May 13, 2015). The Journal of Accounting and Finance. Vol. 15, Issue 6, pp. 17-45, 2015. Available at SSRN: https://ssrn.com/abstract=2331292 or http://dx.doi.org/10.2139/ssrn.2331292

Gregory Leo Nagel (Contact Author)

Middle Tennessee State University ( email )

P.O. Box 50
Murfreesboro, TN 37132
United States

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