Journal article
CEO compensation and turnover: The effects of mutually interlocked boards
Wake Forest law review, Vol.38(3), p935
22 Sep 2003
Abstract
The recent wave of revelations involving corporate governance problems has created significant interest in the relationships between chief executive officers (CEO) and their boards of directors. This paper focuses on one important but previously uninvestigated characteristic of boards: the tendency of many boards to have two (or more) directors who are also members of another company's board. This relationship is defined as a "mutual interlock." Empirical analyses show that CEO compensation tends to be higher and turnover tends to be lower when the CEO's board has one or more pairs of board members who are mutually interlocked with another company's board. There are two possible interpretations of these results: 1. Mutual interlocks are an indication of and contributor to CEO entrenchment. 2. Mutual interlocks are an indication of the strengthening of a valuable strategic alliance for the company, and higher CEO compensation is the reward for arranging the alliance.
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Details
- Title
- CEO compensation and turnover: The effects of mutually interlocked boards
- Creators
- Eliezer FichLawrence White
- Publication Details
- Wake Forest law review, Vol.38(3), p935
- Publisher
- Wake Forest University School of Law
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Identifiers
- 991020542328404721