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 language | English |
---|---|
Pages (from-to) | 220-244 |
Number of pages | 25 |
Journal | Journal of Corporate Finance |
Volume | 45 |
DOIs | |
Publication status | Published - 2017 Aug |
Bibliographical note
Publisher Copyright:© 2017 Elsevier B.V.
All Science Journal Classification (ASJC) codes
- Business and International Management
- Finance
- Economics and Econometrics
- Strategy and Management