Authors
Michelle L Zorn, Christine Shropshire, John A Martin, James G Combs, David J Ketchen Jr
Publication date
2017/12
Journal
Strategic Management Journal
Volume
38
Issue
13
Pages
2623-2646
Publisher
John Wiley & Sons, Ltd
Description
Research summary: Corporate scandals of the previous decade have heightened attention on board independence. Indeed, boards at many large firms are now so independent that the CEO is “home alone” as the lone inside member. We build upon “pro‐insider” research within agency theory to explain how the growing trend toward lone‐insider boards affects key outcomes and how external governance forces constrain their impact. We find evidence among S&P 1500 firms that having a lone‐insider board is associated with (a) excess CEO pay and a larger CEO‐top management team pay gap, (b) increased likelihood of financial misconduct, and (c) decreased firm performance, but that stock analysts and institutional investors reduce these negative effects. The findings raise important questions about the efficacy of leaving the CEO “home alone.”
Managerial summary: Following concerns that insider‐dominated …
Scholar articles
ML Zorn, C Shropshire, JA Martin, JG Combs… - Strategic Management Journal, 2017