DETERMINANTS OF OUTSIDE DIRECTOR TURNOVER

Sharad Asthana and Steven Balsam
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Sharad Asthana: The University of Texas at San Antonio
Steven Balsam: Fox School of Business and Management

No 23, Working Papers from College of Business, University of Texas at San Antonio

Abstract: In this paper we provide evidence that independent director turnover is influenced by a series of economic factors. Directors, both independent and insider, are less likely to leave if they are paid well or if the firm has a director pension plan. They are also more likely to leave when the firm is performing poorly or when they expect it to perform poorly. They are more likely to leave when the firm is riskier, but are less likely to leave when they chair certain committees such as the audit and compensation committee, which may bring them more prestige, or perhaps an additional stipend. Differentially, the association between turnover and firm performance is weaker for inside directors. This is consistent with inside directors’ response to reputation concerns being lower than that of independent directors due to the bonding and compensation effects.

Keywords: Director turnover; economic factors (search for similar items in EconPapers)
JEL-codes: M12 M59 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2007-11-28
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Citations: View citations in EconPapers (9)

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