Board-of-Director Monitoring and CEO Tenure

53 Pages Posted: 13 Jun 2007 Last revised: 25 Feb 2009

See all articles by Harley E. Ryan

Harley E. Ryan

Georgia State University - Department of Finance

Lingling Wang

University of Connecticut - Department of Finance

Roy A. Wiggins

Bentley University - Department of Finance

Date Written: February 25, 2009

Abstract

We examine how CEO tenure and board characteristics affect board monitoring, CEO turnover, and firm performance. We find that board meeting frequency declines as CEO tenure increases and the board has a greater proportion of insiders. The intensity of both relations varies by industry. Tenured CEOs are less likely to be fired, but CEO tenure does not influence the sensitivity of forced turnover to firm performance. Increases in the equilibrium level of monitoring do not relate to operating improvements, but tenured CEOs continue to perform well even when subject to less scrutiny. Our results support the premise that the level of board monitoring evolves over time as a constrained equilibrium influenced by bargaining, learning, and the firm's environment.

Keywords: Board of Directors, Monitoring, Bargaining Power, Learning, Governance

JEL Classification: G30, G34, G38

Suggested Citation

Ryan, Harley E. and Wang, Lingling and Wiggins, Roy A., Board-of-Director Monitoring and CEO Tenure (February 25, 2009). Available at SSRN: https://ssrn.com/abstract=992857 or http://dx.doi.org/10.2139/ssrn.992857

Harley E. Ryan (Contact Author)

Georgia State University - Department of Finance ( email )

University Plaza
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Atlanta, GA 30303-3083
United States
404-651-2674 (Phone)
404-651-2630 (Fax)

Lingling Wang

University of Connecticut - Department of Finance ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States

Roy A. Wiggins

Bentley University - Department of Finance ( email )

175 Forest Street
Waltham, MA 02154
United States

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