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Outside Directors and CEO Selection

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Author Info
Borokhovich, Kenneth A.
Parrino, Robert
Trapani, Teresa
Abstract

This paper documents a strong positive relation between the percentage of outside directors and the frequency of outside CEO succession. The likelihood that an executive from outside the firm is appointed CEO increases monotonically with the percentage of outside directors. This monotonic relation is observed for both voluntary and forced departures. Evidence from stock returns around succession announcements indicates that, on average, shareholders benefit from outside appointments, but are harmed when an insider replaces a fired CEO.

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File URL: http://journals.cambridge.org/abstract_S0022109000000594
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Publisher Info
Article provided by Cambridge University Press in its journal Journal of Financial and Quantitative Analysis.

Volume (Year): 31 (1996)
Issue (Month): 03 (September)
Pages: 337-355
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:cup:jfinqa:v:31:y:1996:i:03:p:337-355_00

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