Board Connections and CEO Successions

68 Pages Posted: 10 Mar 2020 Last revised: 28 Aug 2020

Date Written: August 28, 2020


This paper studies the effects of the connections between CEO candidates and board members on CEO appointment decisions. CEO candidates’ prior connections with the hiring board increase their probability of being hired. These connections can either add or destroy value. Connections with external CEO candidates reduce CEO labor market frictions and improve matching quality. However, connections with internal CEO candidates distort director incentives and decrease firm performance. Further, previous connections between candidates and board members affect the decision to hire outside CEOs. Overall, board connections provide valuable information in external successions and raise agency costs in internal successions.

Keywords: CEO succession, executive turnover, social network, board connections, corporate governance, agency problem, managerial labor market, information frictions

JEL Classification: G34, J20

Suggested Citation

Wang, Xiaoyu, Board Connections and CEO Successions (August 28, 2020). Available at SSRN: or

Xiaoyu Wang (Contact Author)

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

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