TY - JOUR
T1 - Should independent directors have term limits? The role of experience in corporate governance
AU - Dou, Ying
AU - Sahgal, Sidharth
AU - Zhang, Emma Jincheng
PY - 2015/9/1
Y1 - 2015/9/1
N2 - We examine the role of independent directors with extended tenure in board-level governance, monitoring decisions, and advising outcomes. These directors exhibit a higher level of commitment as they attend more board meetings and take more committee memberships. Firms with a higher proportion of these directors have lower chief executive officer (CEO) pay, higher CEO turnover-performance sensitivity, and a smaller likelihood of intentionally misreporting earnings. These firms also restrict the expansion of resources under the CEO's control as they are less likely to make acquisitions, while the acquisitions they do make are of higher quality. Efforts to impose term limits on directors may, therefore, be misguided.
AB - We examine the role of independent directors with extended tenure in board-level governance, monitoring decisions, and advising outcomes. These directors exhibit a higher level of commitment as they attend more board meetings and take more committee memberships. Firms with a higher proportion of these directors have lower chief executive officer (CEO) pay, higher CEO turnover-performance sensitivity, and a smaller likelihood of intentionally misreporting earnings. These firms also restrict the expansion of resources under the CEO's control as they are less likely to make acquisitions, while the acquisitions they do make are of higher quality. Efforts to impose term limits on directors may, therefore, be misguided.
UR - http://www.scopus.com/inward/record.url?scp=84940585909&partnerID=8YFLogxK
U2 - 10.1111/fima.12091
DO - 10.1111/fima.12091
M3 - Article
AN - SCOPUS:84940585909
VL - 44
SP - 583
EP - 621
JO - Financial Management
JF - Financial Management
SN - 0046-3892
IS - 3
ER -