Former CEO advisors and firm performance

Satoshi Ogoe and Katsushi Suzuki

Pacific-Basin Finance Journal, 2023, vol. 79, issue C

Abstract: Using unique data on former CEOs taking advisory positions in their former firms in Japan, we investigate the determinants of advisor selection and how this impacts firm performance. We found that retiring CEOs with higher accounting performance and more co-opted boards are more likely to serve in advisory positions than those with lower accounting performance and fewer co-opted boards. Additionally, firms with their own former CEOs as advisors tend to perform worse than those without such advisors. Finally, we found that firms with former CEO advisors have lower turnover performance sensitivity toward successor CEOs than those without. These results imply that influential CEOs may become advisors and be involved in successor management even after retirement, which may not be beneficial to shareholders.

Keywords: Advisor; CEO turnover; Corporate governance; Co-opted board; Retirement compensation (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:79:y:2023:i:c:s0927538x23001002

DOI: 10.1016/j.pacfin.2023.102034

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