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Former CEO Directors: Lingering CEOs or Valuable Resources?

Author

Listed:
  • Rüdiger FAHLENBRACH

    (EPFL and Swiss Finance Institute)

  • Bernadette A. MINTON

    (The Ohio State University)

  • Carrie H. PAN

    (Santa Clara University)

Abstract

A firm is more likely to reappoint a former CEO to its board of directors after retirement the better is the firm's market-adjusted stock performance and the more powerful is the former CEO. Firms benefit from the presence of former CEOs on their board. Firms with former CEO directors have better accounting performance, higher asset growth and make more investments, controlling for selectivity. The relative performance-turnover sensitivity of the successor CEO is higher when the former CEO is a director. After extremely poor firm performance under their successors, former CEOs often return to the CEO position.

Suggested Citation

  • Rüdiger FAHLENBRACH & Bernadette A. MINTON & Carrie H. PAN, 2010. "Former CEO Directors: Lingering CEOs or Valuable Resources?," Swiss Finance Institute Research Paper Series 10-11, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp1011
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    Keywords

    CEO turnover; rehired CEO; former CEO; board of directors; relative performance evaluation;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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