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The evolution of boards and CEOs following performance declines

  • Easterwood, John C.
  • İnce, Özgür Ş.
  • Raheja, Charu G.
Registered author(s):

    This paper examines the evolution of corporate boards following a large performance decline. Over 40% of the original directors depart the board during the three years following underperformance. Measures of initial CEO influence over the board such as CEO ownership are associated with smaller increases in board independence and less board turnover. The underperforming firms undergo a strong recovery subsequently, with the largest performance improvement occurring among firms that experience no turnover on their boards and among firms that do not change their board independence. We conclude that the large board turnover experienced by underperforming firms presents significant challenges for subsequent recovery.

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    File URL: http://www.sciencedirect.com/science/article/pii/S092911991200051X
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    Article provided by Elsevier in its journal Journal of Corporate Finance.

    Volume (Year): 18 (2012)
    Issue (Month): 4 ()
    Pages: 727-744

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    Handle: RePEc:eee:corfin:v:18:y:2012:i:4:p:727-744
    Contact details of provider: Web page: http://www.elsevier.com/locate/jcorpfin

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