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New evidence on what happens to CEOs after they retire

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  • Lee, Changmin

Abstract

I analyze directorships held by CEOs who retired during the periods 1989-1993, 1995-1999 (before the Sarbanes-Oxley Act) and 2001-2005 (after the Sarbanes-Oxley Act). My results suggest that retired CEOs became less popular on boards after the Sarbanes-Oxley Act. In addition, although pre-retirement accounting performance helps explain the number of outside directorships a retired CEO held in the 1989-1993 sample, as Brickley et al. (1999) have found, it does not explain this number for the 1995-1999 sample and 2001-2005 sample. Third, a company's stock performance during a CEO's tenure is negatively related to the number of outside directorships only in the 2001-2005 sample. Fourth, the number of outside directorships is positively correlated with the size of a retired CEO's original firm before the Sarbanes-Oxley Act, but this is not the case after the Sarbanes-Oxley Act. Finally, if retired CEOs worked in regulated industries, their probability of serving at least one outside directorship 2Â years after retirement falls by 21% in the 1989-1993 sample. However, this negative effect is marginally significant in the 1995-1999 sample, and vanishes in the 2001-2005 sample.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Corporate Finance.

Volume (Year): 17 (2011)
Issue (Month): 3 (June)
Pages: 474-482

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Handle: RePEc:eee:corfin:v:17:y:2011:i:3:p:474-482

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Web page: http://www.elsevier.com/locate/jcorpfin

Related research

Keywords: Corporate governance Boards of directors Sarbanes-Oxley Act Deregulation Professional labor market Accounting performance;

References

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