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Board Connections and CEO Successions

SSRN, ISSN: 1556-5068
2020
  • 3
    Citations
  • 2,259
    Usage
  • 6
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    3
    • Citation Indexes
      3
  • Usage
    2,259
    • Abstract Views
      1,936
    • Downloads
      323
  • Captures
    6
  • Ratings
    • Download Rank
      190,274

Article Description

This paper studies the effects of connections between CEO candidates and board members on CEO succession decisions. CEO candidates’ prior connections with the hiring board increase their probability of being hired. These connections also affect post-succession firm performance. Connections reduce CEO labor market frictions and improve succession efficiency, especially in outside successions. They, however, distort director incentives and lead to inefficient succession decisions when internal governance is weak. Further, board connectedness to candidates can shape firms’ decisions to hire from the outside and reduce uncertainties. Overall, board connections provide information benefits but also raise agency concerns.

Bibliographic Details

Joanna (Xiaoyu) Wang

Elsevier BV

Multidisciplinary; CEO succession; succession planning; CEO replacements; social networks; board connections; corporate governance; agency problem; managerial labor markets; information frictions

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