What's Happened over the Past 10 Years to the Selection of Retired CEOs as Board Members?

23 Pages Posted: 22 May 2007 Last revised: 14 Apr 2013

Changmin Lee

Hanyang University - Seoul Campus; Harvard University - Edmond J. Safra Center for Ethics

Date Written: May 22, 2007

Abstract

I analyze directorships held by CEOs who retired during 1989-1993 and during 1998-2002. My results suggest that retired CEOs became more popular on boards. Also, although pre-retirement accounting performance helps explain the number of outside directorships a retired CEO held in the 1989-1993 sample as Brickley, Linck, and Coles (1999) found, it does not in the 1998-2002 sample. Third, a company's stock performance during a CEO's tenure affects whether he became an inside director of that company after retirement. A 25% change in stock price performance increased the probability by 11% in the 1989-1993 sample, and 51% in the 1998-2002 sample. Finally, if a retired CEO worked in a regulated industry, his probability of serving at least one outside directorship fell by 34% in the 1989-1993 sample, and 24% in the 1998-2002 sample.

Keywords: Corporate governance, Board of director, Deregulation

JEL Classification: G34, G38, L10, L51

Suggested Citation

Lee, Changmin, What's Happened over the Past 10 Years to the Selection of Retired CEOs as Board Members? (May 22, 2007). CAEPR Working Paper No. 2007-007. Available at SSRN: https://ssrn.com/abstract=988162 or http://dx.doi.org/10.2139/ssrn.988162

Changmin Lee (Contact Author)

Hanyang University - Seoul Campus ( email )

17 Haegdang-dong
Seongdong-ku
Seoul, 133-791
Korea

Harvard University - Edmond J. Safra Center for Ethics ( email )

124 Mount Auburn Street
Suite 520N
Cambridge, MA 02138
United States

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