Not clawing the hand that feeds you: The case of co-opted boards and clawbacks
We examine how board co-option, defined as the fraction of the board comprising directors appointed after the CEO assumed office, is related to clawback adoption. We find that co-opted boards have a lower probability of adopting clawback provisions. Further, the negative association between board co...
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| Main Authors: | , , |
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| Format: | text |
| Language: | English |
| Published: |
Institutional Knowledge at Singapore Management University
2019
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| Subjects: | |
| Online Access: | https://ink.library.smu.edu.sg/soa_research/1423 https://ink.library.smu.edu.sg/context/soa_research/article/2422/viewcontent/Not_Clawing_the_Hand_that_Feeds_You_The_Case_of_Co_opted_Boards_and_Clawbacks.pdf |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | We examine how board co-option, defined as the fraction of the board comprising directors appointed after the CEO assumed office, is related to clawback adoption. We find that co-opted boards have a lower probability of adopting clawback provisions. Further, the negative association between board co-option and clawback adoption is more pronounced when at least one co-opted member is on the compensation committee and when there is a higher likelihood that a clawback provision will be triggered. Finally, we find that board co-option is an important mechanism through which longer-tenured CEOs reduce the likelihood of clawback adoption. |
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