How Do Independent Directors View Generalist vs. Specialist CEOs? Evidence from an Exogenous Regulatory Shock

34 Pages Posted: 19 Oct 2021 Last revised: 21 Oct 2021

See all articles by Pattanaporn Chatjuthamard

Pattanaporn Chatjuthamard

Sasin GIBA

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Sirimon Treepongkaruna

The University of Western Australia; Financial Research Network (FIRN)

Date Written: October 19, 2021

Abstract

Exploiting the passage of the Sarbanes-Oxley Act as a quasi-natural experiment, we explore how independent directors view generalist vs. specialist CEOs. Generalist CEOs possess the general managerial skills that can be applied across firms and industries. Our difference-in-difference estimates show that independent directors view generalist CEOs unfavorably. Firms forced to raise board independence experience a lower increase in CEO general ability than those not required to change board composition. Additional analysis confirms the results, including fixed- and random-effects regressions, propensity score matching, instrumental-variable analysis, and Oster’s (2019) technique for testing coefficient stability.

Keywords: generalist CEOs, specialist CEOs, independent directors, board independence, corporate governance, Sarbanes-Oxley

JEL Classification: G28, G32, G34

Suggested Citation

Chatjuthamard, Pattanaporn and Jiraporn, Pornsit and Treepongkaruna, Sirimon, How Do Independent Directors View Generalist vs. Specialist CEOs? Evidence from an Exogenous Regulatory Shock (October 19, 2021). Available at SSRN: https://ssrn.com/abstract=3945686 or http://dx.doi.org/10.2139/ssrn.3945686

Pattanaporn Chatjuthamard

Sasin GIBA ( email )

Bangkok
Thailand

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

Sirimon Treepongkaruna

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia
+61864887853 (Phone)
+61864881086 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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