External Networking and Internal Firm Governance

• 成果类型: Article
• 署名作者: Fracassi, Cesare; Tate, Geoffrey
• 署名单位: University of Texas System; University of Texas Austin; University of California System; University of California Los Angeles
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2011.01706.x
• 发表日期: 2012
• 页码: 153-194
• 关键词: CORPORATE GOVERNANCE; DIRECTORS; acquisitions; OWNERSHIP; boards; POWER

摘要

We use panel data on S&P 1500 companies to identify external network connections between directors and CEOs. We find that firms with more powerful CEOs are more likely to appoint directors with ties to the CEO. Using changes in board composition due to director death and retirement for identification, we find that CEO-director ties reduce firm value, particularly in the absence of other governance mechanisms to substitute for board oversight. Moreover, firms with more CEO-director ties engage in more value-destroying acquisitions. Overall, our results suggest that network ties with the CEO weaken the intensity of board monitoring.