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Avoiding the “too comfortable in the saddle” syndrome: Obtaining high performance from the chairperson, CEO and inside directors

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  • O'Shannassy, Timothy
  • Leenders, Mark A.A.M.

Abstract

When the chairperson and chief executive officer experience long co-tenure working together building knowledge and understanding, strategizing, and developing company-specific resources there can be significant organization performance gains. However the broader board context, especially the insider ratio – the number of executive directors as a proportion of the total number of directors – provides clues as to whether an organization is in a less productive configuration. In this study data from 102 Australian Stock Exchange listed companies is gathered on corporate governance configurations and organization performance. Australia is an interesting setting because the chairperson and chief executive officer roles are generally separated, in contrast to the United States. Results show that organizations with long co-tenure benefit from having a lower insider ratio. Implications are discussed including how the chairperson and chief executive officer working with a large number of inside directors can become “too comfortable in the saddle” negatively impacting performance.

Suggested Citation

  • O'Shannassy, Timothy & Leenders, Mark A.A.M., 2016. "Avoiding the “too comfortable in the saddle” syndrome: Obtaining high performance from the chairperson, CEO and inside directors," Journal of Business Research, Elsevier, vol. 69(12), pages 5972-5982.
    • Handle: RePEc:eee:jbrese:v:69:y:2016:i:12:p:5972-5982
    DOI: 10.1016/j.jbusres.2016.05.011
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