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CEO board membership: implications for firm value

CEO board membership: implications for firm value PurposeThis paper aims to examine the relation between CEO board membership and firm performance.Design/methodology/approachThis paper investigates the relationship between firm performance and CEO board membership, applying two-stage least squares, propensity score matching and correcting for self-selection bias across a unique sample of publicly listed New Zealand firms that demonstrate a definitive variation in CEO board membership.FindingsThis study finds that CEO board membership has a positive impact on firm performance, and these benefits are greater for more complex firms.Research limitations/implicationsFirms with CEOs independent of the board are associated with lower firm performance. The results are consistent with CEO board members providing an important information transfer mechanism to the board, resulting in an increase in average firm performance. This benefit is greater for larger firms with more business segments.Originality/valueThe paper tests for the impact of CEO board membership using a data set that demonstrates a definitive variation in CEO board membership. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Pacific Accounting Review Emerald Publishing

CEO board membership: implications for firm value

Pacific Accounting Review , Volume 30 (3): 19 – Aug 6, 2018

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0114-0582
DOI
10.1108/PAR-05-2017-0037
Publisher site
See Article on Publisher Site

Abstract

PurposeThis paper aims to examine the relation between CEO board membership and firm performance.Design/methodology/approachThis paper investigates the relationship between firm performance and CEO board membership, applying two-stage least squares, propensity score matching and correcting for self-selection bias across a unique sample of publicly listed New Zealand firms that demonstrate a definitive variation in CEO board membership.FindingsThis study finds that CEO board membership has a positive impact on firm performance, and these benefits are greater for more complex firms.Research limitations/implicationsFirms with CEOs independent of the board are associated with lower firm performance. The results are consistent with CEO board members providing an important information transfer mechanism to the board, resulting in an increase in average firm performance. This benefit is greater for larger firms with more business segments.Originality/valueThe paper tests for the impact of CEO board membership using a data set that demonstrates a definitive variation in CEO board membership.

Journal

Pacific Accounting ReviewEmerald Publishing

Published: Aug 6, 2018

References

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