Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/48601
Authors: 
Balsmeier, Benjamin
Buchwald, Achim
Peters, Heiko
Year of Publication: 
2011
Series/Report no.: 
DICE discussion paper 26
Abstract: 
We investigate whether outside board memberships of CEOs signal expertise or entrenchment. The analysis is based on panel data of the largest German companies covering the period from 1996 to 2008. Supporting the entrenchment hypothesis, our analysis reveals that firms having a CEO with one or more outside mandates suffer from significantly weaker firm performance compared with firms having a CEO without any outside board mandates. Moreover, disciplinary CEO turnovers become less likely and turnover-performance sensitivity declines with rising board memberships of the top manager. We conclude that outside mandates enhance managerial power at the expense of the home firm's shareholders.
Subjects: 
Corporate Governance
Entrenchment
Outside Board Memberships
CEO turnover
JEL: 
J24
J63
L25
M50
Document Type: 
Working Paper

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