Refreshing boards: Countering CEO entrenchment

Mustafa A. Dah

Research in International Business and Finance, 2025, vol. 75, issue C

Abstract: This paper examines the effect of director refreshment on CEO entrenchment, which is often highlighted as a symptom of poor monitoring and heightened agency conflicts. Findings suggest that board refreshment decreases both the CEO entrenchment index and excess compensation. Moreover, results imply that board refreshment has a favorable moderating influence on the negative association between managerial entrenchment and firm performance. I show that all seven of the individual refreshment characteristics significantly contribute to the achievement of these outcomes. Overall, this paper emphasizes the positive effect of board refreshment on internal monitoring efficiency, thereby tempering managerial entrenchment and consequently advancing shareholder welfare.

Keywords: Board refreshment; Board monitoring; CEO entrenchment; CEO excess compensation; Firm performance; JEL code; G34 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:75:y:2025:i:c:s0275531924005336

DOI: 10.1016/j.ribaf.2024.102740

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