What matters more in board independence? Form or substance: Evidence from influential CEO-directors

Arun Upadhyay and Ozde Oztekin ()

Journal of Corporate Finance, 2021, vol. 71, issue C

Abstract: We exploit heterogeneities among CEO-directors and find that influential CEO-directors (ICDs) provide value through advising and monitoring. To expansively capture their relative influence, we identify CEO-directors who command more pay than the appointing firm's CEO. We find ICDs are more (less) likely to serve on the compensation (audit) committee. ICDs serve on more board seats and benefit more by serving on these seats. ICDs improve the performance of their appointing firm by increasing CEO pay-performance sensitivities and by helping with R&D and M&A activities. Alternatively, uninfluential CEO-directors are largely inconsequential or even detrimental to the appointing firm.

Keywords: Board independence; Influential CEO-directors; Firm value; CEO compensation; CEO turnover (search for similar items in EconPapers)
JEL-codes: G30 G34 J33 M40 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:71:y:2021:i:c:s0929119921002212

DOI: 10.1016/j.jcorpfin.2021.102099

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