Document Type
Report
Key Takeaways
Directors who served on the board when a CEO was hired are more likely to remain committed to that CEO following poor firm performance. • For every one hiring director remaining on the board, poorly performing CEOs are 25% more likely to be retained and receive a 25% higher change in pay. • These effects are weaker for more experienced boards, indicating experience reduces the tendency to overcommit to their hand-picked CEOs.
Publication Date
2020
Source
Zorn M.L., DeGhetto K., Ketchen D.J., & Combs J.G. (2019). The impact of hiring directors' choicesupportive bias and escalation of commitment on CEO compensation and dismissal following poor performance: A multimethod study. Strategic Management Journal.
Disciplines
Business
Copyright
© 2020, University of South Carolina
Publication Info
Zorn M.L., DeGhetto K., Ketchen D.J., & Combs J.G. (2019). The impact of hiring directors' choicesupportive bias and escalation of commitment on CEO compensation and dismissal following poor performance: A multimethod study. Strategic Management Journal., 2020.