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Boards of directors make high‐stake decisions that involve hiring, compensating, and dismissing CEOs. Building on theory about choice‐supportive bias and escalation of commitment, we theorize that “hiring directors” (directors who were present during a CEO's hiring) will display choice‐supportive bias and escalate commitment to poorly performing CEOs. Primary data from 73 directors indicate that directors are indeed biased toward CEOs they help hire. Archival data from S&P 1500 firms reveal that, following poor performance, the number of hiring directors is positively related to the increase in CEO pay and lower likelihood of CEO dismissal. Building on theory about board experience, we also predict and find that more experienced boards reduce the tendency to escalate. Thus, bias among hiring directors can be mitigated via experience.

Making a choice such as …