Do Chair Independence and Succession Planning Influence CEO Turnover?

34 Pages Posted: 12 Dec 2014

See all articles by Christian von Drathen

Christian von Drathen

University of Texas at Dallas - Naveen Jindal School of Management

Date Written: November 2014

Abstract

There is widespread concern that corporate boards do not sufficiently punish chief executive officers (CEOs) for poor performance. Board effectiveness in ousting CEOs may be affected by chief executives who also chair the board or influence the succession planning process. This article explores how chair independence and succession planning influence CEO turnover. I address endogeneity issues using a trinomial probit regression system of CEO turnover that models chair independence and succession planning endogenously. I find that succession planning has a larger positive effect on CEO turnover than suggested by previous research. I also find that chair independence actually reduces the probability of succession planning because it creates a friction with the common relay succession model. There is a negative overall effect of chair independence on CEO turnover.

Suggested Citation

von Drathen, Christian, Do Chair Independence and Succession Planning Influence CEO Turnover? (November 2014). Available at SSRN: https://ssrn.com/abstract=2536653 or http://dx.doi.org/10.2139/ssrn.2536653

Christian Von Drathen (Contact Author)

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

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