Network connections, CEO compensation and involuntary turnover: The impact of a friend of a friend

Steven Balsam, So Yean Kwack, Jae Young Lee

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

We show that hard to observe, indirect connections between a CEO and “independent” board members are associated with higher CEO compensation. While we find this result for the “friend of a friend” connection, we do not find it for direct connections, i.e. friends sitting on the board. We postulate that this differential result is caused by directors with readily observable connections to the CEO being wary of provoking outrage. In contrast we find both types of connections associated with reduced involuntary CEO turnover, suggesting that outrage is not as big a concern, e.g., compensation is the foci of stakeholders.

Original languageEnglish
Pages (from-to)220-244
Number of pages25
JournalJournal of Corporate Finance
Volume45
DOIs
Publication statusPublished - 2017 Aug

    Fingerprint

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

Cite this