Co-opted Boards

• 成果类型: Article
• 署名作者: Coles, Jeffrey L.; Daniel, Naveen D.; Naveen, Lalitha
• 署名单位: Utah System of Higher Education; University of Utah; Drexel University; Pennsylvania Commonwealth System of Higher Education (PCSHE); Temple University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhu011
• 发表日期: 2014
• 页码: 1751
• 关键词: CORPORATE GOVERNANCE; ceo turnover; executive-compensation; CADBURY-COMMITTEE; firm performance; DIRECTORS; RISK; SHAREHOLDERS; CONTRACTS; IMPACT

摘要

We develop two measures of board composition to investigate whether directors appointed by the CEO have allegiance to the CEO and decrease their monitoring. Co-option is the fraction of the board comprised of directors appointed after the CEO assumed office. As Co-option increases, board monitoring decreases: turnover-performance sensitivity diminishes, pay increases (without commensurate increase in pay-performance sensitivity), and investment increases. Non-Co-opted Independence-the fraction of directors who are independent and were appointed before the CEO-has more explanatory power for monitoring effectiveness than the conventional measure of board independence. Our results suggest that not all independent directors are effective monitors.