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Are Some Outside Directors Better than Others? Evidence from Director Appointments by Fortune 1000 Firms
Journal article   Open access

Are Some Outside Directors Better than Others? Evidence from Director Appointments by Fortune 1000 Firms

The Journal of business (Chicago, Ill.), v 78(5), pp 1943-1972
01 Sep 2005
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https://papers.ssrn.com/sol3/papers.cfm?abstract_id=491362View
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Abstract

Boards of directors Chief executive officers Corporate governance Investment advisors Labor market Outside directors Perceptions Stockholders Strategic management Studies
I analyze 1,493 first-time director appointments to Fortune 1000 boards, during 1997-99, to investigate whether certain outside directors are better than others. Reactions to director appointments are higher when appointees are CEOs of other companies than when they are not. CEOs are more likely to obtain outside directorships when the companies they head perform well. Well-performing CEOs are also more likely to gain directorships in organizations with growth opportunities. Because, for these firms, a large portion of their value hinges upon realizing their growth potential, I conclude that CEOs are sought as outside directors to enhance firm value. [PUBLICATION ABSTRACT]

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