Shawn Mobbs, Culverhouse College of Commerce University of Alabama, USA
5th Oct 2012 11:30 am - Room 214/215, H69 - Economics and Business Building
Do directors learn from their prior CEO turnover experiences?
This study examines independent directors who have had prior experience with a CEO turnover event. Experienced directors are more active in subsequent boards as evident in fewer meeting absences and greater involvement in the nominating committee relative to other independent directors. Interestingly, they are less likely to be a member of the audit committee and subsequent CEO turnover events are less sensitive to accounting performance. Conversely, as the number of CEO turnover experiences increase, each event the director is involved with becomes increasingly sensitive to firm stock performance. These results are consistent with experienced directors learning from their prior associations with CEO turnover and their becoming more concerned with indicators of long run performance expectations. Not surprisingly, there is also evidence that CEOs are less supportive of experienced director appointments to their boards.