How do independent directors view generalist vs. specialist CEOs? Evidence from an exogenous regulatory shock

Pattanaporn Chatjuthamard, Pornsit Jiraporn and Sirimon Treepongkaruna

International Review of Financial Analysis, 2021, vol. 78, issue C

Abstract: Exploiting the passage of the Sarbanes-Oxley Act as a quasi-natural experiment, we explore how independent directors view generalist vs. specialist CEOs. Generalist CEOs possess the general managerial skills that can be applied across firms and industries. Our difference-in-difference estimates show that independent directors view generalist CEOs unfavorably. Firms forced to raise board independence experience a lower increase in CEO general ability than those not required to change board composition. Additional analysis confirms the results, including fixed- and random-effects regressions, propensity score matching, instrumental-variable analysis, and Oster's (2019) technique for testing coefficient stability.

Keywords: Generalist CEOs; Specialist CEOs; Independent directors; Board independence; Corporate governance; Sarbanes-Oxley (search for similar items in EconPapers)
JEL-codes: G28 G32 G34 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:78:y:2021:i:c:s1057521921002775

DOI: 10.1016/j.irfa.2021.101957

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