What Happens to CEOs After They Retire? New Evidence on Career Concerns, Horizon Problems, and CEO Incentives
48 Pages Posted: 23 Jun 1998 Last revised: 4 Mar 2018
Date Written: December 1, 1998
This paper provides evidence on a previously unidentified source of managerial incentives: concerns about post-retirement board service. Both the likelihood that a retired CEO serves on his own board two years after departure, as well as the likelihood of serving as an outside director on other boards, are positively and strongly related to his performance while CEO. Retention on the CEO's own board depends primarily on stock returns, while service on outside boards is better explained by accounting returns. The evidence also suggests that firms consider ability in choosing board members.
JEL Classification: G30, G32, J33
Suggested Citation: Suggested Citation