Printer Friendly

The impact of forced CEO turnover on committee structure.

In a decade where corporate restructuring is common, it is not surprising to read about replacement CEOs who bring in their own management teams. Consider, for example, Albert J. 'Chainsaw Al' Dunlap who was known for cleaning house upon taking office as a new CEO. Much attention in the financial press has been given to the impact of a CEO succession on the composition of the current management team (e.g., Blumenstein, 1998). However, financial economic research has primarily focused on the factors that impact the likelihood of CEO turnover (e.g., Warner et al., 1988; Weisbach, 1988; Parrino, 1997). Only recently has any attention been given to the resulting impact of turnover on the board of directors (e.g., Hermalin and Weisbach, 1988; Farrell and Whidbee, 2000; Denis and Sam, 1999).

Absent from all of these studies is a focus on how CEO succession affects the composition and structure of board committees. Recent evidence suggests that committee structure is an important determinant of board effectiveness (e.g., Klein, 1998). Vafeas (1999) argues that basic monitoring tasks are almost always delegated to standing board committees. The composition, existence and effectiveness of the various board committees, for example, can impact the overall effectiveness of the board. In addition, many argue and evidence exists that CEOs have significant control over the director selection process, especially if CEOs serve on the board's nominating committee (Mace, 1986; Jensen, 1993; Shivdasani and Yermack, 1999). Extant literature also suggests that CEOs have significant control over committee assignments (e.g., Klein, 1998). Given the importance of board committee structure and the potential for CEOs to control the composition of these committees, it is useful to examine changes in committee structu re following forced CEO turnover to determine the extent to which a new CEO is a catalyst for change in board committee structure.

Using a sample of 66 forced CEO departures documented between 1982 and 1992, we compare the committee structures of firms that forcibly remove their CEOs to the committee structure of firms from a matched sample that do not forcibly remove their CEOs. (1) Because the objective of this study is to analyze whether forced CEO turnover is a mechanism for change, we examine how new CEOs alter the committee structure of their firms relative to the firm's pre-turnover structure and relative to the matched sample of firms. We analyze whether directors that participated in the forced removal of a CEO experience changes in their role in the firm's decision-making process. We also analyze whether new directors are added to the firm after forced CEO removal for the purpose of serving on specific committees.

Our study adds to our understanding of board committee structure by providing an in-depth examination of the composition of committees around forced turnover. Our analysis includes the determinants of committee membership for the full sample of directors and for forced- versus matched-sample directors. More broadly, the results of the study contribute to a continuing debate surrounding corporate governance structures.

The remainder of the paper is organized as follows. The next section describes the related literature. This is followed by the sample selection process and the data, including descriptive statistics for the firms and directors in the turnover and matched samples. We then present an analysis of the empirical results, and a discussion of these results. Last, our conclusions are set forth.

LITERATURE REVIEW

The limited research that examines the functions and composition of corporate board committees tends to focus on individual committees. For example, Verschoor (1993) analyzes the independence of the audit committee and Harrison (1987) analyzes the strategic committee. Vafeas (1999) and Shivdasani and Yermack (1999) examine the effects on director selection of CEOs serving on nominating committees and the existence of nominating committees.

Kesner (1988) examines how director affiliation, tenure and gender affect audit, nominating, compensation and executive committee composition. With the exception of the executive committee, Kesner finds that members of the audit, compensation and nominating committees are more likely to be outsiders and to have long tenures as directors.

Klein (1998) evaluates the link between board composition and firm performance by assessing the composition of the boards' committee structures. She argues that inside directors serve a more critical function by serving on committees that require a substantial amount of firm-specific knowledge, such as finance and long-term investment committees. Outside directors, on the other hand, play a more vital role in the monitoring function of the board and thereby provide a more valuable service to the board by serving on the audit or compensation committees. Consistent with these arguments, Klein finds a positive relation between the percentage of insiders on the board's finance and investment committees and firm performance.

We extend this literature by analyzing changes in committee assignments around forced CEO turnover relative to a matched sample of firms that do not force CEO turnover. Our focus allows us to determine if corporate boards modify their committee structure to become more effective monitors or decision makers after forcing CEO turnover.

SAMPLE DESIGN

Selecting the Sample of Forced CEO Turnovers

To examine whether the CEO replacement decision impacts board committee structure, we use the unregulated sample of 66 forced CEO turnovers and 66 matched sample firms identified by Farrell and Whidbee (2000). (2) Farrell and Whidbee used these two groups of firms to examine whether outside directors face an increased likelihood of leaving the board or gaining additional directorships after forcing CEO turnover. The results of their analysis suggest that outside directors are more likely to leave the board following CEO turnover if they do not own much firm equity, are closely aligned with the outgoing CEO, and make a poor replacement decision. Those directors that remain on the board, however, are more likely to gain additional directorships.

The matched-sample approach has two advantages. First, we can distinguish between changes in the committee structure that are simply due to the evolution of time and those that are due to changes made by a new CEO. Second, we can use the matched-sample firms to determine normal committee turnover rates with which we can compare the forced-turnover sample. Farrell and Whidbee's (2000) matching firms were identified using two-digit standard industrial classification (SIC) codes, total asset size (between 50 percent and 150 percent of the forced turnover firm's total assets), and firm performance (as measured by annual stock returns).

Matching on industry and size controls for potential industry and size effects on director turnover and committee structure. Matching on performance controls for the empirical regularity that CEO turnover is negatively associated with firm performance (e.g., Warner et al., 1988; Parrino, 1997). Some of the matched-sample firms experienced a voluntary turnover, which includes retirement, normal management succession, illness, death or taking a prestigious appointment elsewhere. In the matched sample identified, 29 firms experience voluntary turnover and the remaining 37 firms experience no turnover during the five-year period.

The turnover process itself may result in some restructuring of the board committees since a new CEO may install his or her own board regardless of whether he or she is replacing a CEO that was forced Out or a CEO that retired. Since the matched sample includes 29 firms experiencing voluntary CEO turnover, we can control for a general turnover effect. If the changes in the forced-turnover firm's committee structure are simply due to CEO turnover, we will not find any significant differences between these firms and the committee structure of firms that experience voluntary CEO turnover.

Data Collection for Board of Directors

We collected board membership and committee structure data from the last proxy statement filed in the 12 months prior to the turnover date and four years after turnover (five years from the pre-turnover proxy date) for the forced-turnover sample and matched sample. In addition, we documented the age, tenure as director, affiliation, committee memberships, and equity ownership of each director prior to forced CEO turnover and four years after turnover. We chose a four-year follow-up period because many boards of directors have three classes of directors with staggered three-year terms. Consequently, within four years after the turnover, the new CEO has been involved in the election process of every member on the board.

Since our focus is changes in committee assignments, we determined changes by comparing pre-turnover committee assignments to post-turnover committee assignments (according to the proxy statement filed four years after turnover) for directors that remained on the board surrounding CEO succession. In addition, new director committee membership was determined by evaluating the post-turnover proxy statements.

Analyzing the Matching of the Turnover Firms

The financial characteristics of the turnover and the matched samples are shown in Table 1. Although both samples experience negative market-adjusted stock returns prior to the turnover date, paired comparisons indicate the forced-turnover sample performed significantly worse than the matched sample. Although not shown in Table 1, financial statement measures of performance (e.g., return on average assets) do not show a significant difference between the forced-turnover and matched-sample firms. Firms in the forced-turnover and matched samples are of comparable size as measured by the market value of equity. Using sales as a measure of size indicates that turnover firms are significantly larger than matched-sample firms. Therefore, despite efforts to control for size and performance differences, the forced-turnover sample appears to be larger and to have performed worse prior to CEO turnover than the matched sample. We attempt to control for the potential size and performance differences by including sales an d pre-turnover stock returns in the empirical analysis that follows.

The ownership structure and corporate governance characteristics of directors in the turnover and matched sample are also shown in Table 1. The percentage of equity ownership is not significantly different between the forced-turnover and matched samples for both affiliated and independent outside directors based on the pre-turnover proxy statements. The percentage of equity ownership among insiders, however, is significantly greater in the matched-sample firms. The pre-turnover board composition in the forced-turnover sample is similar to that of the matched sample. Board size is approximately twelve for both samples.

Interestingly, the number of committee seats held by independent outsiders is significantly higher in the forced-turnover firms relative to the matched-sample firms. This may be due to the size differences between the two samples as larger firms may tend to have more committees. The average age and tenure for all directors does not vary significantly between the matched sample and forced-turnover sample prior to turnover. Post-turnover performance, as measured by average annual market-adjusted stock returns, is not significantly different between the two samples.

EMPIRICAL RESULTS AND DISCUSSION

Changes in Board Size and Committee Structure Following Forced CEO Turnover

Next, we analyzed changes in the composition of the board for the forced- and matched-sample firms. Table 2 shows that board size is decreasing over the sample period for both samples. The matching firms tend to replace fewer departing directors than the forced turnover firms, as indicated by an 81.6 percent versus 86.3 percent replacement rate, respectively. The decreasing board size may also reflect an improvement in board efficiency for both samples based on the recent findings of Yermack (1996), who documents an inverse relation between board size and firm performance.

The majority of the loss in number of directors for the forced-turnover (matched-) sample firms occurs within the inside director group with a 66 (69) percent replacement rate. The low replacement rate of insiders is consistent with Klein's (1998) finding that firms appear to be increasingly replacing inside directors with outsiders. She asserts that this trend may be the result of external pressure from groups such as the business roundtable, American Law Institute, shareholder activists, and the financial press who actively advocate independent boards. As noted by Vafeas (1999), however, imposing uniform boards or committee structures across firms may create monitoring activity that is both redundant and costly for some firms.

The forced-turnover firms also appear much more likely to replace affiliated directors than matching firms (99 percent compared to a 67 percent replacement rate, respectively), which is consistent with affiliated directors being more closely tied to the CEO. The new CEO may want to bring in his or her own affiliated directors that are more likely to support his or her position. In addition, we find that outside replacement of CEOs is comparable across the two samples. Of the 66 forced CEO turnovers, 25 (38 percent) of the new CEOs came from outside the firm while 10 of the 29 new CEOs (35 percent) in the matched sample came from outside the firm. We define a new CEO as an outside replacement if he/she was neither employed by the firm nor served on the firm's board prior to being appointed CEO.

Turning our focus to the number and composition of the board committees in our sample, Table 3 shows that prior to turnover, the forced turnover firms have as many or more committees and larger committees than the matched-sample firms. (3) For example, all forced-turnover firm committees, with the exception of the pension committee, have a mean number of directors per committee that is greater than the matched sample. These differences may be due to the firm size differences noted earlier. As shown in Table 1, however, board size is no greater in the forced turnover sample than in the matched sample.

Given the greater number of committees in the forced-turnover sample and the greater number of directors on those committees, it is not surprising that independent outside directors hold more committee seats in the forced-turnover sample than in the matched sample, as shown in Table 1. It's interesting to note, however, that the mean number of directors per committee is more comparable across the two samples following CEO turnover.

There is little evidence of committee structure changing in the direction of being more effective. Klein (1998) finds a positive relationship between firm performance and the percentage of insiders on finance and investment committees. We find a decrease in the representation of insiders on the finance committee for both samples. The composition of the committees pre-and post-turnover for the forced-turnover sample firms indicates a general trend toward a reduction in the presence of insiders sitting on committees. The matched-sample firms show a decrease in the percentage of insiders sitting on the executive, nominating and finance committees. This trend is consistent with Klein's finding that firms appear to be increasingly replacing inside directors with outsiders.

The most notable change in the composition of the committees pre-and post-turnover is for the nominating committee. Table 3 shows that the number of firms with nominating committees increases for both the forced-and matched-sample firms after turnover. In addition, the mean number of directors per committee declines for both samples. The forced-turnover firms increase the percentage of affiliated outsiders and reduce the percentage of both insiders and independent outside directors on the nominating committee. The matched-sample firms reduce the percentage representation of insiders and increase the representation of independent outsiders on the nominating committee. Again, these results are consistent with Vafeas (1999) who finds that when nominating committees are formed, over 84 percent of the directors are outsiders.

Turnover Among Committee Members

To further analyze the turnover among committee members, Table 4 provides an alternative illustration of the general trend depicted in Tables 2 and 3 for each of the six committees analyzed. The general trend previously noted is that the number of directors serving on the forced-turnover firm committees is decreasing while the number of directors serving on the matched-sample firm committees is remaining fairly constant.

One exception to the general trend is that the number of directors serving on the executive committee decreases substantially for the matched-sample firms relative to the forced-turnover firms after turnover. The most notable difference is the number of new directors gaining seats on the executive committee for the forced-turnover sample (54) relative to the matched-sample firms (22). This may be a result of the new CEOs of the forced-turnover firms replacing executive committee members with his or her own inside appointments or affiliated outside directors. Table 3 also shows that three firms in the matched sample no longer have a separate executive committee after turnover, while one additional firm has an executive committee for the forced-turnover sample.

For the audit committee, we find a greater number of directors losing committee seats and leaving the board for the forced-turnover firms relative to the matched-sample firms. In addition, it appears that those directors are more likely to be replaced by a new director in the turnover sample than in the matched sample. The overall change in the compensation committee appears to be driven by the difference in the number of existing directors gaining seats on the compensation committee after turnover. Only 56 existing directors gain seats on turnover firm compensation committees while 72 existing directors gain seats on the matched-sample firms. These differences appear to drive the decline (increase) in number of directors serving on the compensation committee after turnover for the forced-turnover (matched-) sample firms.

In sum, Table 4 shows a general tendency for forced-turnover sample committees to experience greater turnover than matched-sample committees. Specifically, it appears that turnover sample committee members are more likely to lose a committee seat with many also leaving the board. Further, it appears that empty board seats are more likely to be filled by new directors in the forced-turnover sample than the matched sample.

Determinants of the Likelihood of Committee Members Leaving the Board. To more formally analyze turnover among committee members, we analyze the likelihood of committee members leaving the board and the likelihood of committee members losing committee assignments for those directors remaining on the board. These likelihoods are estimated using a series of logit models. The first set of logit models we estimate defines the dependent variable as one if a director leaves the board in the four years following forced CEO turnover, and zero if the director remains on the board. A director is defined as leaving the board if he or she is not listed as a director on the proxy statement filed four years after turnover. We estimate the model for each of the six committees: executive, audit, compensation, nominating, pension, and finance.

In addition to the FORCED variable, we include the following explanatory variables in the model to control for any impact these variables may have on director turnover: the natural log of director's age, the natural log of firm sales, board size, the percentage of equity owned by the director, a dummy variable equal to one if the director is an insider, a dummy variable equal to one if the director is an independent outsider, the two-year average market-adjusted stock return for the firm prior to CEO turnover, a dummy variable equal to one if the firm experiences any (forced or voluntary) CEO turnover, and a dummy variable equal to one if the new CEO is from outside the forced-turnover sample firm. The results are shown in Table 5.

Consistent with Farrell and Whidbee (2000), Table 5 shows that older directors experience an increased likelihood of turnover. We find that the increased likelihood of director turnover is independent of the type of committee seats the director holds. In addition, equity ownership by individual directors reduces the likelihood of turnover, but only for directors serving on the executive, audit and compensation committees. Inside directors are more likely to leave the board if they serve on the audit and compensation committees. Turnover, whether forced or voluntary, increases the likelihood of executive, audit and compensation committee members leaving the board. Forced turnover, however, only appears relevant when analyzing director turnover on the audit committee. In addition, members of the executive and finance committees are more likely to leave the board if the firm experiences a forced CEO turnover with an outside replacement.

Determinants of the Likelihood of Losing Committee Assignments for Directors Remaining on the Board. The second set of logit models we estimate is limited to directors that remain on the board and were members of a given committee prior to CEO turnover. We define the dependent variable as being equal to one if a director loses a committee seat in the four years following forced CEO turnover, and zero if the director remains on the committee according to the proxy statement dated four years after the forced CEO turnover. We estimate the model for each of the six committees. The explanatory variables for the logit models in Table 6 are the same as in Table 5, except that the board size variable is eliminated from the analysis because it is not expected to affect committee turnover for those directors that remain on the board.

Table 6 shows that inside directors that remain on the board are less likely to lose an executive committee assignment. We also find an increased likelihood of independent outsiders losing audit committee assignments and a decreased likelihood of independent outside directors losing compensation committee assignments. However, directors that force CEO turnover and remain on the board experience a greater likelihood of losing executive, compensation and finance committee assignments after turnover; whereas, turnover, whether voluntary or forced, increases the likelihood of directors losing audit, nominating and pension committee assignments.

In general, the results in Tables 5 and 6 suggest that forced turnover increases the likelihood of directors leaving the board or, for those remaining on the board, losing committee assignments. These results would seem to suggest that new CEOs make significant changes to the committee assignments of individual directors. In the next section, we analyze the committee assignments of new directors in an effort to determine whether new directors take a more active role in the forced-turnover sample firms relative to the matched-sample firms.

The Committee Assignments of New Directors

Table 4 indicates that when an existing director loses a committee assignment, he or she is more likely to be replaced by a new director in the turnover sample than in the matched sample. The turnover among committee members in Table 4 suggests that new directors in the forced-turnover sample take a more active role in the governance of the firm than new directors in the matched sample. Before we can draw that conclusion, however, we need to control for the empirical regularity that there are fewer existing directors in the forced-turnover sample firms from which committee members can be drawn.

In an effort to address this issue, we estimate the determinants of whether a new director serves on a given committee. The dependent variable is equal to one if the director serves on the committee and zero if the director does not serve on the committee. We control for the availability of existing directors by including the percentage of the board that is comprised of new directors as one of the explanatory variables. The other explanatory variables are the same as those shown in Table 6, with the exception of the pre-turnover stock returns variable, which is excluded. The results of this analysis are shown in Table 7.

In Table 7 we find that new directors are more likely to serve on the executive, compensation, and nominating committees when there are more new directors on the board, as indicated by the positive coefficient on the percent of the board that is comprised of new directors. New directors are more likely to serve on nominating, pension, and finance committees when the firm is relatively large. This is not surprising given that larger firms are more likely to have these committees. As expected, new inside directors are more likely to serve on the executive committee, but less likely to serve on the audit, compensation, and nominating committees. New outside directors are more likely to serve on the compensation and nominating committees. These results are not surprising given that the major exchanges require the existence of audit committees and require or recommend that the audit committee be comprised solely or include a majority of independent directors.

There is no evidence to suggest that new directors in the forced-turn-over sample are more likely to serve on a committee than their matched-sample counterparts. There is some evidence that new directors are more likely to serve on the audit committee following any type of CEO turnover ad indicated by the positive coefficient for the TURNOVER variable in column two of Table 7. The negative coefficient on the TURNOVER variable in column 5 is probably attributable to the small number of pension committees in the sample.

Therefore, given the results shown in Table 7, it appears that new directors in the forced-turnover sample sit on more committees than new directors in the matched sample because of the high number of existing directors that leave the board of the forced-turnover sample firms. After we control for the percentage of the board that is comprised of new directors, there is no significant difference in the likelihood of new directors in the forced-turnover sample sitting on a given committee than new directors in the matched sample.

DISCUSSION

The results suggest that board size decreases over the sample period for both the forced-turnover and matched-sample firms. The declining board size for the forced-turnover sample firms is driven by inside directors not being replaced on the board after turnover. The reduction in board size for the matched-sample firms arises due to lower replacement rate for both inside directors. These changes primarily result in a reduction in the representation of insiders on both forced- and matched-sample firms committees after turnover and a general increase in representation of outside directors. The most notable change in committee structure is the size of the committees. Committees tend to be larger for the forced-turnover sample firms relative to the matched-sample firms prior to turnover but become more comparable in size after turnover.

We also find that directors serving on the executive, audit and compensation committees are more likely to leave the board if the sample firm experiences CEO turnover, whether the turnover is voluntary or forced. However, if the firm experiences forced turnover, if the firm experiences forced turnover, the audit committee members are more likely to leave the board than their matched-sample counterparts. Further, if the new CEO was appointed from outside the firm, executive and finance committee members are more likely to leave the forced-turnover sample firm than the matched-sample firm. For directors that remain on the board after forced CEO turnover, individual directors serving on the executive, compensation and finance committees face a greater likelihood of losing their committee assignment after turnover relative to their matched sample counterparts. However, new directors in the forced-turnover sample were no more likely to serve on a given committee than new directors in the matched sample.

In sum, our results suggest that forced CEO turnover does lead to changes in committee assignments for individual directors, but not to overall committee structure. There is greater turnover among directors in the forced-turnover sample. Consequently, new directors take on a more active role (by sitting on committees) than new directors in the matched sample. This suggests that, in addition to influencing new director selection, new CEOs may also have an influence on the committee assignments of individual directors.

This study has important implications for managers, board members, and academicians. For managers, the results suggest that newly appointed CEOs have the opportunity to make significant changes to the governance structure of their firms. Many managers take advantage of this opportunity by reducing the size of the board and board committees. For board members that force CEO turnover, many experience a reduced role in the governance of the firm. For newly appointed board members in firms that force CEO turnover, the evidence suggests a greater involvement in the firm. For researchers, our results indicate that forced CEO turnover affects change by inducing board turnover and by altering the committee assignments of individual board members, especially when the newly appointed CEO is from outside the firm.

CONCLUSION

We examine how forced CEO succession affects board committee structure. The issues we address include the following: Is forced CEO turnover associated with significant changes in the number, type, and composition of board committees? Do pre-turnover director committee assignments change after forced turnover and, if so, how? What committee assignments do newly appointed board members assume? And, are these issues affected by whether the new CEO is an inside appointment or an outside appointment? By examining these issues, we contribute to the overall understanding of corporate governance structures.

The results suggest that forced CEO succession leads to only minor changes in the number and type of board committees. In addition, there were only minor changes to the composition of committees in terms of the percentage of inside directors, affiliated outside directors and independent outside directors on the committees. The most notable change is smaller committees post turnover. Our results suggest that forced CEO turnover does lead to changes in committee assignments for individual directors, but not to overall committee structure. There is greater turnover among directors in the forced-turnover sample. Consequently, new directors take on a more active role (by sitting on committees) in the forced-turnover sample than new directors in the matched sample.

This study is subject to several limitations. First, we differentiate turnover between forced and voluntary using the Wall Street Journal. To the extent that firms do not disclose the 'true' reason for the CEO turnover, we may misclassify turnovers as voluntary that are actually forced. However, to minimize this problem, we read news releases around the 29 voluntary turnovers in our matched sample to determine if there may be a reason for turnover other than that disclosed in the turnover announcement. A second limitation of the study is the generalizability of the results. As noted in footnote 2, we eliminate regulated firms from our sample. Luoma and Goodstein (1999) provide evidence that committee structure does not differ between regulated and unregulated firms. However, overall board structure has been shown to differ significantly between regulated and unregulated firms (e.g., Baysinger and Zardkoohi, 1986; Subrahmanyam et al., 1997). Therefore, our results may not be applicable to regulated firms and additional research analyzing committee structure of regulated firms may be appropriate.
Table 1

Means and Tests for Differences in the Returns, Financial
Characteristics, Ownership Structure, and Corporate Governance
Characteristics of 66 Firms With Forced CEO Turnover and 66 Matched
Firms Without Forced CEO Turnover

This table provides summary characteristics of 66 firms that forced CEO
turnover during the 1982-1992 period and a matched sample of firms that
do not force CEO turnover. Stock return data are from CRSP. Other
financial characteristics are from Compustat and board of director data
are from proxy statements.

 Means for Means for
 Finns With Firms Without
 Forced CEO Forced CEO
Variable Turnover Turnover

Pre-turnover financial characteristics (b)

Sales (in billions) (c) $3.523 $3.058
Market value of equity (in billions) (c) $2.791 $2.271
Average annual market-adjusted -12.27% -7.56%
 stock return prior to turnover
 (2 years) (d)

Pre-turnover ownership structure

Share ownership by inside directors
 of the firm 2.76% 5.77%
Share ownerahip by affiliated 1.13% 1.17%
 outside directors
Share ownership by independent 1.16% 1.08%
 outside directors

Pre-turnover corporate governance

Board size 11.9 12.3
Inside director board membership (e) 29.04% 28.72%
Affiliated outsider board membership (e) 23.12% 23.17%
Independent outsider board membership (e) 47.84% 48.10%

Committee seats held by each inside director 1.03 0.82
Committee seats held by each 1.85 1.63
 affiliated outsider
Committee seats held by each
 independent outsider 1.90 1.56

CEO age (in years) 59.1 58.0
CEO tenure (in years us a director) 13.3 15.2

Average age for all directors (in years) 59.5 59.1
Average tenure for all directors (in years) 9.1 9.6

Post-turnover performance

Average annual market-adjusted -0.83% -0.53%
 stock return after turnover (1 year) (d)
Average annual market-adjusted stock -1.04% -1.96%
 return after turnover (4 years) (d)


 t-statistic (a)

Variable

Pre-turnover financial characteristics (b)

Sales (in billions) (c) 1.723 (*)
Market value of equity (in billions) (c) 1.226
Average annual market-adjusted -1.831 (*)
 stock return prior to turnover
 (2 years) (d)

Pre-turnover ownership structure

Share ownership by inside directors
 of the firm -2.055 (**)
Share ownerahip by affiliated -0.060
 outside directors 0.147
Share ownership by independent
 outside directors

Pre-turnover corporate governance

Board size -0.824
Inside director board membership (e) 0.137
Affiliated outsider board membership (e) -0.021
Independent outsider board membership (e) -0.093

Committee seats held by each inside director 1.499
Committee seats held by each 1.427
 affiliated outsider
Committee seats held by each
 independent outsider 2.682 (***)

CEO age (in years) 0.890
CEO tenure (in years us a director) -1.033

Average age for all directors (in years) 1.074
Average tenure for all directors (in years) -1.005

Post-turnover performance

Average annual market-adjusted -0.060
 stock return after turnover (1 year) (d)
Average annual market-adjusted stock 0.384
 return after turnover (4 years) (d)

(a)The t-statistic tests the null hypotehsis that the difference between
the two sample means is zero. The t-statistic is based on paired
comparisons between the two samples. Similar results are found using the
nonparametric signed rank test.

(***)indicates that the difference in means is statistically significant
at the 1% level.

(**)indicates that the difference in means is statistically significant
at the 5% level.

(*)indicates that the difference in means is statistically significant
at the 10% level.

(b)Financial characteristics are measured as of the end of the year
preceding turnover.

(c)Sales and market value of equity are expressed in constant 1990
dollars.

(d)Stock returns are market-adjusted using the CRSP NYSE/AMEX/Nasdaq
value-weighted index.

(e)Inside directors include corporate officers. Affiliated outside
directors have a business relationship with the firm, retired from the
firm, or are related to a top officer. Independent outside directors
have no affiliation with the firm other than their directorship. These
categories are consistent with Farrell and Whidbee (2000), Klein (1998),
Hermalin and Weisbach (1991), and Weisbach (1988).
Table 2

Director Turnover for 66 Firms With Forced CEO Turnover and 66 Matched
Firms Without Forced CEO Turnover

This table summarizes changes in the types of directors for 66 firms
that forced CEO turnover during the 1982- 1992 period and a matched
sample of firms that do not force CEO turnover. The changes shown in the
table occurred in the four years following forced CEO turnover.

 Forced Turnover Sample
 Number of Number of
 Directors Directors
 Leaving the Added to the
Director Type (a) Board Board

Inside Directors 136 90
 CEO 46 25
 Other Officers 90 65

Affiliated Outside Directors 94 93

Independent Outside Directors 172 164

Total 402 347

 Matched Sample
 Number of Number of
 Directors Directors
 Leaving the Added to the
Director Type (a) Board Board

Inside Directors 81 56
 CEO 13 10
 Other Officers 68 46

Affiliated Outside Directors 82 55

Independent Outside Directors 152 146

Total 315 257

(a)Inside directors include corporate officers. Affiliated outside
directors have a business relationship with the firm, retired from the
firm, or are related to a top officer. Independent outside directors
have no affiliation with the firm other than their directorship. These
categories are consistent with Farrell and Whidbee (2000), Klein (1998),
Hermalin and Weisbach (1991), and Weisbach (1988).
Table 3

Committee Structure of 66 Firms With Forced CEO Turnover (T) and 66
Matched Firms Without Forced CEO Turnover (M)

 Pre-turnover
 Committee
 Structure
 Executive
 Committee
 T

Number of Firms with Committee 41
Mean number of directors per committee 4.85

Percentage of committee members that are
 Inside directors (a) 51.3%
 Outside directors (a) 32.6%
 Affiliated directors (a) 16.2%

Number of Firms with Committee 42
Mean number of directors per committee 4.17

Percentage of committee members that are
 Inside directors (a) 50.0%
 Outside directors (a) 31.5%
 Affiliated directors (a) 18.5%

 Pre-turnover Committee
 Structure
 Executive
 Committee
 M

Number of Firms with Committee 41
Mean number of directors per committee 4.73

Percentage of committee members that are
 Inside directors (a) 53.6%
 Outside directors (a) 28.0%
 Affiliated directors (a) 18.5%

Number of Firms with Committee 38
Mean number of directors per committee 4.21

Percentage of committee members that are
 Inside directors (a) 52.1%
 Outside directors (a) 29.5%
 Affiliated directors (a) 18.4%

 Pre-turnover Committee
 Structure
 Audit
 Committee
 T M

Number of Firms with Committee 65 63
Mean number of directors per committee 4.43 3.95

Percentage of committee members that are
 Inside directors (a) 2.2% 0.3%
 Outside directors (a) 65.0% 70.4%
 Affiliated directors (a) 32.8% 29.3%

Number of Firms with Committee 64 63
Mean number of directors per committee 4.05 4.10

Percentage of committee members that are
 Inside directors (a) 0.8% 1.5%
 Outside directors (a) 65.2% 68.1%
 Affiliated directors (a) 34.0% 30.4%

 Pre-turnover Committee
 Structure
 Compensation
 Committee
 T M

Number of Firms with Committee 63 62
Mean number of directors per committee 4.68 4.03

Percentage of committee members that are
 Inside directors (a) 4.8% 3.8%
 Outside directors (a) 65.4% 67.5%
 Affiliated directors (a) 29.8% 28.7%

Number of Firms with Committee 64 65
Mean number of directors per committee 4.11 4.02

Percentage of committee members that are
 Inside directors (a) 4.9% 5.3%
 Outside directors (a) 68.3% 74.6%
 Affiliated directors (a) 26.8% 20.1%

 Pre-turnover Committee
 Structure
 Nominating
 Committee
 T M

Number of Firms with Committee 44 35
Mean number of directors per committee 4.95 4.51

Percentage of committee members that are
 Inside directors (a) 17.1% 15.8%
 Outside directors (a) 64.5% 55.6%
 Affiliated directors (a) 18.3% 28.5%

Number of Firms with Committee 48 44
Mean number of directors per committee 4.61 4.32

Percentage of committee members that are
 Inside directors (a) 13.2% 10.8%
 Outside directors (a) 59.4% 60.1%
 Affiliated directors (a) 27.5% 29.1%

 Pre-turnover Committee
 Structure
 Pension
 Committee
 T M

Number of Firms with Committee 14 11
Mean number of directors per committee 4.29 4.64

Percentage of committee members that are
 Inside directors (a) 13.2% 18.0%
 Outside directors (a) 58.8% 60.3%
 Affiliated directors (a) 28.0% 21.7%

Number of Firms with Committee 17 9
Mean number of directors per committee 3.29 4.56

Percentage of committee members that are
 Inside directors (a) 9.3% 19.4%
 Outside directors (a) 72.2% 59.5%
 Affiliated directors (a) 18.5% 21.1%

 Pre-turnover Committee
 Structure
 Finance
 Committee
 T M

Number of Firms with Committee 22 16
Mean number of directors per committee 5.73 5.13

Percentage of committee members that are
 Inside directors (a) 30.7% 21.7%
 Outside directors (a) 41.2% 41.8%
 Affiliated directors (a) 28.1% 36.5%

Number of Firms with Committee 23 21
Mean number of directors per committee 4.91 4.62

Percentage of committee members that are
 Inside directors (a) 22.8% 15.9%
 Outside directors (a) 43.2% 46.9%
 Affiliated directors (a) 34.1% 37.1%

(a)Inside directors include corporate officers. Affiliated outside
directors have a business relationship with the firm, retired from the
firm, retired from the firm, or are related to a top officer.
Independent outside directors have no affiliation with the firm other
than their directorship. These categories are consistent with Farrell
and Whidbee (2000), Klein (1998), Hermalin and Weisbach (1991), and
Weisbach (1991), and Weisbach (1998).
Table 4

Changes in Committee Assignments

This table shows changes in committee assignments for a sample of
outside directors drawn from 66 firms that forced CEO turnover and a
matched sample of 66 firms that did not force CEO turnover. The table
shows changes in committee assignments for the outside directors that
remain on the board of directors four years after turnover.

 Number of Number of
 Directors Directors
 on the Losing
 Committee Committee Seat
 Before CEO and Leaving the
Committee Sample Turnover Board

Executive Turnover Sample 143 77
 Matching Sample 147 74

Audit Turnover Sample 280 144
 Matching Sample 249 86

Compensation Turnover Sample 281 145
 Matching Sample 241 101

Nominating Turnover Sample 188 99
 Matching Sample 138 65

Pension Turnover Sample 57 27
 Matching Sample 47 22

Finance Turnover Sample 104 60
 Matching Sample 72 29

 Number of Number of Number of Number of
 Directors Existing New Directors
 Losing Directors Directors on the
 Committee Seat Gaining Gaining Committee
 but Remaining Committee Seat Committee Seat After CEO
Committee on the Board After Turnover After Turnover Turnover

Executive 24 36 54 132
 18 37 22 114

Audit 47 50 117 256
 47 57 83 256

Compensation 47 56 107 252
 32 72 73 253

Nominating 29 57 77 194
 17 65 50 171

Pension 15 14 24 53
 7 5 16 39

Finance 15 19 47 95
 6 18 32 87
Table 5

Likelihood or Committee Members Leaving the Board

Parameter estimates (and t-statistics) of the likelihood of a director
leaving the board of directors for a sample of directors drawn from 66
firms that forced CEO turnover and a matched sample of 66 firms that did
not force CEO turnover. The dependent variable is equal to one if a
director leaves the board in the fours years following forced CEO
turnover, zero if the director remains on the board. A director is
defined as leaving the board if he or she is not listed as a director on
the proxy statement dated four years following forced CEO turnover. The
model is estimated as a standard logit model.

 Members of the
Explanatory Variables Executive
(measured prior to turnover) Committee Prior to
 Turnover

Constant -23.716 (***)
 (-5.374)

Natural log of director's age 5.333 (***)
 (5.147)

Natural log of firm sales 0.043
 (0.358)

Board size 0.094 (**)
 (1.975)

Percentage of equity owned -12.133 (**)
by the director (-2.522)

Director is an insider -0.266
(1 if yes, 0 if no) (-0.814)

Director is an independent -0.613 (*)
outsider (1 if yes, 0 if no) (-1.808)

Two-year market-adjusted stock -0.044
return prior to CEO turnover (-0.156)

TURNOVER (1 if firm 0.822 (**)
experienced CEO turnover) (2.549)

FORCED (1 if firm experienced -0.269
forced CEO turnover, 1 if no) (-0.891)

New CEO is from outside the firm 0.679 (*)
(1 if yes, 0 if no) (1.887)

Number of Observations 393

 Members of the
Explanatory Variables Audit Committee
(measured prior to turnover) Prior to Turnover


Constant -25.799 (***)
 (-7.095)

Natural log of director's age 6.114 (***)
 (7.017)

Natural log of firm sales -0.072
 (-0.855)

Board size 0.023
 (0.693)

Percentage of equity owned -23.039 (*)
by the director (-1.879)

Director is an insider 3.739 (***)
(1 if yes, 0 if no) (3.030)

Director is an independent 0.023
outsider (1 if yes, 0 if no) (0.109)

Two-year market-adjusted stock 0.309
return prior to CEO turnover (1.198)

TURNOVER (1 if firm 0.548 (*)
experienced CEO turnover) (1.898)

FORCED (1 if firm experienced 0.638 (**)
forced CEO turnover, 1 if no) (2.464)

New CEO is from outside the firm -0.385
(1 if yes, 0 if no) (-1.334)

Number of Observations 537

 Members of the
Explanatory Variables Compensation
(measured prior to turnover) Committee Prior to
 Turnover

Constant -31.284 (***)
 (-8.213)

Natural log of director's age 7.376 (***)
 (7.998)

Natural log of firm sales -0.109
 (-1.305)

Board size 0.104 (***)
 (2.753)

Percentage of equity owned -28.497 (***)
by the director (-3.179)

Director is an insider 2.220 (***)
(1 if yes, 0 if no) (3.612)

Director is an independent -0.271
outsider (1 if yes, 0 if no) (-1.249)

Two-year market-adjusted stock -0.028
return prior to CEO turnover (-0.109)

TURNOVER (1 if firm 0.482 (*)
experienced CEO turnover) (1-671)

FORCED (1 if firm experienced 0.090
forced CEO turnover, 1 if no) (0.345)

New CEO is from outside the firm 0.151
(1 if yes, 0 if no) (0.529)

Number of Observations 545

 Members of the
Explanatory Variables Nominating
(measured prior to turnover) Committee Prior to
 Turnover

Constant -43.858 (***)
 (-8.217)

Natural log of director's age 10.462 (***)
 (7.993)

Natural log of firm sales -0.070
 (-0.583)

Board size 0.066
 (1.536)

Percentage of equity owned -7.937
by the director (-1.030)

Director is an insider 0.139
(1 if yes, 0 if no) (0.334)

Director is an independent -0.123
outsider (1 if yes, 0 if no) (-0.402)

Two-year market-adjusted stock 0.209
return prior to CEO turnover (0.701)

TURNOVER (1 if firm 0.389
experienced CEO turnover) (1.035)

FORCED (1 if firm experienced 0.415
forced CEO turnover, 1 if no) (1.219)

New CEO is from outside the firm 0.537
(1 if yes, 0 if no) (1.440)

Number of Observations 376

 Members of the
Explanatory Variables Pension Committee
(measured prior to turnover) Prior to Turnover


Constant -65.595 (***)
 (-4.579)

Natural log of director's age 16.501 (***)
 (4.640)

Natural log of firm sales -0.124
 (-0.507)

Board size -0.051
 (-0.454)

Percentage of equity owned -425.000
by the director (-1.161)

Director is an insider 0.467
(1 if yes, 0 if no) (0.531)

Director is an independent -0.762
outsider (1 if yes, 0 if no) (-1.166)

Two-year market-adjusted stock 0.252
return prior to CEO turnover (0.412)

TURNOVER (1 if firm 0.122
experienced CEO turnover) (0.170)

FORCED (1 if firm experienced 0.045
forced CEO turnover, 1 if no) (0.067)

New CEO is from outside the firm 0.033
(1 if yes, 0 if no) (0.041)

Number of Observations 111

 Members of the
Explanatory Variables Finance Committee
(measured prior to turnover) Prior to Turnover


Constant -29.274 (***)
 (-4.306)

Natural log of director's age 6.790 (***)
 (4.194)

Natural log of firm sales 0.117
 (0.715)

Board size -0.006
 (-0.076)

Percentage of equity owned 0.648
by the director (0.066)

Director is an insider 0.002
(1 if yes, 0 if no) (0.003)

Director is an independent 0.102
outsider (1 if yes, 0 if no) (0.271)

Two-year market-adjusted stock -0.061
return prior to CEO turnover (-0.157)

TURNOVER (1 if firm 0.320
experienced CEO turnover) (0.603)

FORCED (1 if firm experienced 0.297
forced CEO turnover, 1 if no) (0.701)

New CEO is from outside the firm 1.424 (***)
(1 if yes, 0 if no) (2.067)

Number of Observations 208

Note: (***)indicates that the difference in means is statistically
significant at the 1% level.

(**)indicates that the difference in means is statistically significant
at the 5% level.

(*)indicates that the difference in means is statistically significant
at the 10% level.
Table 6

Likelihood of Committee Members Losing Committee Assignments

Parameter estimates (and t-statistics) of the likelihood of a director
losing a committee assignment for a sample of directors drawn from 66
firms that forced CEO turnover and a matched sample of 66 firms that did
not force CEO turnover. The analysis is limited to those directors that
remain on the board. The dependent variable is equal to one if the
director is not listed as being a member of a given committee according
to the proxy statement dated four years after forced CEO turnover, zero
if the director is listed as being a member of the committee. The model
is estimated as a standard logit model.

 Members of the Members of the
Explanatory Variables Executive Audit Committee
(measured prior to turnover) Committee

Constant -8.476 -2.969
 (-1.562) (-0.651)

Natural log of director's age 2.231 0.499
 (1.643) (0.452)

Natural log of firm sales -0.081 -0.104
 (-0.533) (-0.956)

Percentage of equity -4.965 2.121
owned by the director (-0.692) (0.170)

Director is an insider -1.390 (***) 15.796
(1 if yes, 0 if no) (-2.900) (0.036)

Director is an independent -0.512 0.756 (**)
outsider (1 if yes, 0 if no) (-1.200) (2.452)

Two-year market-adjusted stock 1.297 (***) 0.144
return prior to CEO turnover (2.950) (0.416)

TURNOVER (1 if firm experiennced -1.035 (*) 0.637 (*)
CEO turnover) (-1.807) (1.757)

FORCED (1 if firm experienced 0.991 (*) 0.023
forced CEO turnover, 0 if no) (1.784) (0.064)

New CEO is from outside the 0.462 -0.648
firm (1 if yes, 0 if no) (0.839) (-1.516)

Number of Observations 209 304

 Members of the Members of the
Explanatory Variables Compensation Nominating
(measured prior to turnover) Committee Committee

Constant 2.745 -2.286
 (0.640) (-0.359)

Natural log of director's age -0.461 0.292
 (-0.435) (0.184)

Natural log of firm sales -0.169 -0.037
 (-1.579) (-0.241)

Percentage of equity 2.938 -36.721
owned by the director (0.263) (-1.300)

Director is an insider 0.907 0.819
(1 if yes, 0 if no) (1.501) (1.436)

Director is an independent -0.866 (***) -0.302
outsider (1 if yes, 0 if no) (-2.808) (-0.801)

Two-year market-adjusted stock -0.049 0.566
return prior to CEO turnover (-0.142) (1.330)

TURNOVER (1 if firm experiennced -0.720 1.181 (*)
CEO turnover) (-1.637) (2.303)

FORCED (1 if firm experienced 0.827 (*) -0.302
forced CEO turnover, 0 if no) (1.917) (-0.667)

New CEO is from outside the 0.586 0.525
firm (1 if yes, 0 if no) (1.484) (1.074)

Number of Observations 292 192

 Members of the Members of the
Explanatory Variables Pension Committee Finance Committee
(measured prior to turnover)

Constant 23.269 (*) 6.175
 (1.692) (0.598)

Natural log of director's age -6.l19 (*) -1.138
 (-1.750) (-0.447)

Natural log of firm sales -0.117 -0.521 (**)
 (-0.283) (-2.105)

Percentage of equity 102.400 -16.161
owned by the director (1.124) (-0.364)

Director is an insider -2.057 0.362
(1 if yes, 0 if no) (-1.595) (0.521)

Director is an independent 0.435 0.388
outsider (1 if yes, 0 if no) (0.509) (0.635)

Two-year market-adjusted stock 0.056 0.128
return prior to CEO turnover (0.051) (0.193)

TURNOVER (1 if firm experiennced 2.448 (**) 0.317
CEO turnover) (2.287) (0.330)

FORCED (1 if firm experienced 0.905 1.468 (*)
forced CEO turnover, 0 if no) (1.020) (1.950)

New CEO is from outside the -3.515 (**) -12.958
firm (1 if yes, 0 if no) (-2.401) (-0.029)

Number of Observations 60 111

Note: (***)indicates that the difference in means is statistically
significant at the 1% level.

(**)indicates that the difference in means is statistically significant
at the 5% level.

(*)indicates that the difference in means is statistically significant
at the 10% level.
Table 7

Likelihood of New Board Members Acquiring Committee Assignments

Parameter estimates (and t-statistics) of the likelihood of a new
director gaining a committee assignment for a sample of directors drawn
from 66 firms that forced CEO turnover and a matched sample of 66 firms
that did not force CEO turnover. The analysis is limited to those
directors that are added to the board during the four years after forced
CEO turnover. The dependent variable is equal to one if the director is
listed as being a member of a given committee according to the proxy
statement dated four years after forced CEO turnover, zero if the
director is not listed as being a member of committee. The model is
estimated as a standard logit model.

Explanatory Variables Member of the Member of the
 Executive Audit
 Committee Committee

Constant -12.688 (***) -3.989
 (-3.267) (-1.388)

Percent of the Board that 2.089 (***) -0.705
is Comprised of New Directors (3.117) (-1.328)

Natural log of director's age 2.049 (**) 1.077
 (2.156) (1.535)

Natural log of firm sales 0.103 -0.107
 (1.087) (-1.444)

Percentage of equity owned 2.328 -2.352
by the director (0.576) (-0.548)

Director is an insider 1.771 (***) -4.694 (***)
(1 if yes, 0 if no) (5.161) (-4.600)

Director is an independent -0.205 -0.006
outsider (1 if yes, 0 if no) (-0.607) (-0.026)

TURNOVER (1 if firm 0.354 0.676 (**)
experienced CEO turnover) (0.815) (2.241)

FORCED (1 if firm experienced 0.090 0.068
forced CEO turnover, 0 if no) (0.273) (0.268)

New CEO is from outside the 0.088 -0.277
firm (1 if yes, 0 if no) (0.278) (-0.998)

Number of Observations 604 604

Explanatory Variables Member of the Member of the
 Compensation Nominating
 Committee Committee

Constant -9.263 (***) -10.309 (***)
 (-3.051) (-2.878)

Percent of the Board that 1.183 (**) 1.063 (*)
is Comprised of New Directors (2.187) (1.769)

Natural log of director's age 1.732 (**) 1.172
 (2.354) (1.355)

Natural log of firm sales 0.087 0.511 (***)
 (1.140) (5.457)

Percentage of equity owned 0.920 -66.015
by the director (0.231) (-1.022)

Director is an insider -2.786 (***) -1.240 (***)
(1 if yes, 0 if no) (-4.524) (-2.906)

Director is an independent 0.690 (***) 0.443 (*)
outsider (1 if yes, 0 if no) (3.079) (1.714)

TURNOVER (1 if firm 0.004 -0.527
experienced CEO turnover) (0.013) (-1.556)

FORCED (1 if firm experienced 0.007 0.475
forced CEO turnover, 0 if no) (0.026) (1.625)

New CEO is from outside the 0.319 -0.031
firm (1 if yes, 0 if no) (1.135) (-0.101)

Number of Observations 604 604

Explanatory Variables Member of the Member of the
 Pension Finance
 Committee Committee

Constant -10.585 (*) -11.240 (***)
 (-1.767) (-2.627)

Percent of the Board that 0.609 1.107
is Comprised of New Directors (0.626) (1.636)

Natural log of director's age 0.880 1.520
 (0.606) (1.470)

Natural log of firm sales 0.525 (***) 0.339 (***)
 (3.285) (3.119)

Percentage of equity owned -391.300 -164.200
by the director (-0.906) (-1.163)

Director is an insider -0.174 -0.603
(1 if yes, 0 if no) (-0.211) (-1.413)

Director is an independent 0.934 (*) -0.263
outsider (1 if yes, 0 if no) (1.851) (-0.909)

TURNOVER (1 if firm -1.405 (**) 0.657
experienced CEO turnover) (-2.297) (1.572)

FORCED (1 if firm experienced 0.739 -0.017
forced CEO turnover, 0 if no) (1.253) (-0.057)

New CEO is from outside the 0.728 -0.541
firm (1 if yes, 0 if no) (1.560) (-1.407)

Number of Observations 604 604

Note: (***)indicates that the difference in means is statistically
significant at the 1% level.

(**)indicates that the difference in means is statistically significant
at the 5% level.

(*)indicates that the difference in means is statistically significant
at the 10% level.


(1.) We define forced turnover as a turnover that occurs due to pressure by the board of directors, management shakeup, resignation, firing or poor performance as described in the Wall Street Journal. Our matching criteria restricts the matching firms to firms that do not experience forced turnover over a five-year period surrounding the turnover date. The matching firms include 29 firms that experience voluntary turnover and 37 firms that experience no turnover.

(2.) We use an unregulated sample since Baysinger and Zardkoohi (1986) and Subrahmanyam et al. (1997) find that the boards of directors of regulated firms are significantly different from industrial organizations. For example, Subrahmanyam et al. (1997) find that bank boards are, on average, substantially larger than those of non-financial firms. The larger size is attributable entirely to the presence of outside directors and fewer inside directors. Luoma and Goodstein (1999) find that large boards may rely more on committees to conduct business. These differences suggest it may be more appropriate to analyze regulated and non-regulated industries separately.

(3.) Many of the firms in the sample have additional committees. The number of firms with these other types of committees, however, is too small to provide any meaningful results. Therefore, we do not include those committees in the analysis.

References

Baysinger, B. D. and A. Zardkoohi. 1986. "Technology, Residual Claimants and Corporate Control." Journal of Law, Economics, and Organization 2: 339-349.

Blumenstein, R. 1998. "A New CEO's Choice: Keep the Old Team or Bring Your Own." Wall Street Journal (December 24): Al.

Denis, D. J. and A. Sarin. 1999. "Ownership and Board Structure in Publicly Traded Corporations." Journal of Financial Economics 52: 187-223.

Farrell, K. A. and D. A. Whidbee. 2000. "The Consequences of Forced CEO Succession for Outside Directors." Journal of Business 73: 597-627.

Harrison, J. R. 1987. "The Strategic Use of Corporate Board Committees." California Management Review 30: 109-126.

Hermalin, B. E. and M. S. Weisbach. 1988. "The Determinants of Board Composition." RAND Journal of Economics 19: 589-606.

_____ and _____. 1991. "The Effects of Board Composition and Direct Incentives on Firm Performance." Financial Management 20: 101-112.

Jensen, M. C. 1993. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems." Journal of Finance 48: 831-880.

Kesner, I. F. 1988. "Directors' Characteristics and Committee Membership: An Investigation of Type, Occupation, Tenure, and Gender." Academy of Management Journal 31: 66-84.

Klein, A. 1998. "Firm Performance and Board Committee Structure." Journal of Law and Economics 41: 275-303.

Luoma, P. and J. Goodstein. 1999. "Stakeholders and Corporate Boards: Institutional Influences on Board Composition and Structure." Academy of Management Journal 42: 553- 563.

Mace, M.L. 1986. Directors: Myth and Reality. Boston, MA Harvard University Press.

Parrino, R. 1997. "CEO Turnover and Outside Succession: A Cross-Sectional Analysis." Journal of Financial Economics 46: 165-197.

Shivdasani, A. and Yermack, D. 1999. "CEO Involvement in the Selection of New Board Members: An Empirical Analysis." Journal of Finance 54: 1829-1853.

Subrahmanyam, V., N. Rangan and S. Rosenstein. 1997. "The Role of Outside Directors in Bank Acquisitions." Financial Management 26: 23-36.

Vafeas, N. 1999. "The Nature of Board Nominating Committees and Their Role in Corporate Governance." Journal of Business, Finance and Accounting 26: 199-225.

Verschoor, C. C. 1993. "Benchmarking the Audit Committee." Journal of Accountancy: 59- 64.

Warner,J. B., R. L. Watts and K. Wruck. 1988. "Stock Prices and Top Management Changes." Journal of Financial Economics 20: 461-492.

Weisbach, M. S. 1988. "Outside Directors and CEO turnover." Journal of Financial Economics 20: 431-460.

Yermack, D. 1996. "Higher Market Valuation of Companies with a Small Board of Directors." Journal of Financial Economics 40: 185-211.
COPYRIGHT 2002 Pittsburg State University - Department of Economics
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2002 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:effect of chief executive officer succession on board committees
Author:Farrell, Kathleen A.; Whidbee, David A.
Publication:Journal of Managerial Issues
Geographic Code:1USA
Date:Mar 22, 2002
Words:9831
Previous Article:The impact of moral intensity dimensions on ethical decision making: Assessing the relevance of orientation (*).
Next Article:A multidimensional examination of slack and its impact on innovation.
Topics:


Related Articles
Management-succession lockjaw.
Succeeding at succession.
Opening up an insular culture.
THE 5 BEST AND 5 WORST BOARDS OF 1999.
Flavor of the Month?
Gutting the CEO's power.
Getting your bench right: succession planning tends to focus on the CEO, but getting the right C-suite rotation can be just as important.
Lonely at the top: who can CEOs turn to for support in trying times?
Let's get real on role separation: is splitting the CEO and chairperson positions leading edge ... or over the edge?

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters |