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"Tenure on Corporate Boards and Corporate Governance"

It is unclear how the length of tenure of directors on corporate boards is related to the board’s purpose of overseeing firm management. I provide insight to the relationship using a sample of corporate directors for firms in the S&P 1500 for the period 1996–2017. I find that director tenure influences membership on three important committees. I find that boards with high median tenure are more likely to overstate financial statements and tend to provide a smaller level of total compensation to the CEO. However, tenure is not related to subsequent appointments to the board. Finally, I show that board tenure is related to the market and accounting performance of the firm, as measured by Tobin’s Q and the firm’s return on assets, accounting for endogeneity of board tenure using instrumental variables.
Benjamin Posmanick,
Nov 22, 2019, 7:20 AM