Do CEOs' Outside Directorships Affect the Performance of Their Own Firms?

68 Pages Posted: 5 Dec 2019 Last revised: 29 Jun 2020

See all articles by Pengcheng Zhu

Pengcheng Zhu

affiliation not provided to SSRN

Date Written: June 2020

Abstract

The practice of CEOs serving on the boards of other firms has raised concerns from investors and proxy advisory firms about the potential harm to shareholders of CEOs’ own firms. I find that holding just one outside directorship benefits shareholders while holding multiple directorships results in a performance decline. Evidence suggests that benefits come from CEOs' learning as CEOs without any previous outside board experience and CEOs with low general management ability lead to a more substantial performance increase. These findings support investors' concerns but also point out the benefits of CEOs' outside board experience from management skill development.

Keywords: Chief Executive Officer (CEO); Outside director; Board experience; General management skill; Corporate governance

JEL Classification: G34, J24

Suggested Citation

Zhu, Pengcheng, Do CEOs' Outside Directorships Affect the Performance of Their Own Firms? (June 2020). Available at SSRN: https://ssrn.com/abstract=3490295 or http://dx.doi.org/10.2139/ssrn.3490295

Pengcheng Zhu (Contact Author)

affiliation not provided to SSRN

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