CEO influence on the board of directors: Evidence from corporate spinoffs

Duong T. Pham

European Financial Management, 2020, vol. 26, issue 5, 1324-1349

Abstract: We utilize a sample of spinoff firms that need to form a new board of directors, to shed light on the chief executive officer (CEO) influence hypothesis. We find spinoff boards with a CEO who was the parent firm CEO to be similarly structured to the boards of industry and size‐matched peers, whereas spinoff boards with nonparent CEOs are structured for greater monitoring. Consistent with our board structure results, the CEO compensation and replacement decisions of parent CEO spinoff boards are more lenient toward spinoff CEOs, whereas those of nonparent CEO spinoff boards are more consistent with protecting shareholder benefits.

Date: 2020
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