"Board Structure and Monitoring: New Evidence from CEO Turnovers" Authors: Lixiong Guo and Ronald Masulis - School of Banking and Finance The University of New South Wales
Location:
Gerri C. LeBow Hall405
3220 Market Street
Philadelphia, PA 19104
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Abstract “We use the 2003 NYSE and NASDAQ listing rules concerning board and committee independence as a quasi-natural experiment to examine the causal relations between board structure and CEO monitoring. Noncompliant firms forced to raise board independence or adopt a fully independent nominating committee significantly increase their forced CEO turnover sensitivity to performance relative to compliant firms. Nominating committee independence is important even for firms with an independent board, and the effect is stronger when the CEO previously sat on the committee. We conclude that more independent boards and fully independent nominating committees lead to more effective CEO monitoring and discipline”.