Not Clawing the Hand that Feeds You: The Case of Co-opted Boards and Clawbacks

Sterling Huang, Chee Yeow Lim and Jeffrey Ng

European Accounting Review, 2019, vol. 28, issue 1, 101-127

Abstract: We examine how board co-option, defined as the fraction of the board comprising directors appointed after the CEO assumed office, is related to clawback adoption. We find that co-opted boards have a lower probability of adopting clawback provisions. Further, the negative association between board co-option and clawback adoption is more pronounced when at least one co-opted member is on the compensation committee and when there is a higher likelihood that a clawback provision will be triggered. Finally, we find that board co-option is an important mechanism through which longer tenured CEOs reduce the likelihood of clawback adoption.

Date: 2019
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DOI: 10.1080/09638180.2018.1446036

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