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Understanding the Antecedents and Consequences of CEO External Directorships
Abstract
This dissertation examines the antecedents and consequences of Chief Executive Officer (CEO) external directorships. CEO external directorships have garnered significant attention in strategic management research. Although CEOs’ main responsibilities are to serve on their home board to lead the strategic management process and deal with daily operations, they are also attractive candidates to be invited to serve on the boards of external host firms because of their unique expertise and experience in leadership positions. On one hand, they can gain new knowledge from these external service roles. On the other hand, they may also utilize these service roles to gain personal interests, such as status and compensation. They use this power to form an inner circle of elite executives. However, the market for outside directors has changed after the passage of the Sarbanes-Oxley (SOX) Act in 2002. In conjunction with this change, shareholders’ perspectives on CEO external directorships have also shifted. Firms restrict their CEOs from sitting on multiple external boards to avoid having their time and attention diverted.
Given the changing landscape of the market for outside directors, my dissertation extends this literature by studying the following: 1) What characteristics lead CEOs to receive their first external directorships? 2) What are the firm-level consequences of CEO external directorships? I conduct two studies to answer these two research questions. In Study 1, I examine how three CEO personality traits—including CEO extraversion, conscientiousness, and openness to experience—affect the likelihood of having their external directorships along with the contingency roles of home firm performance, firm diversification, and environmental uncertainty. In Study 2, I develop a new theoretical perspective of CEO board service demands and examine how three board-service-demands indicators—including network distance, host-firm performance, and host-firm status—influence the long-term performance of home firms. In examining the CEO board service demands-performance relationship, I also study a number of home-firm moderators related to board support, including the number of directors appointed after the CEO, the number of outside CEO directors, and board-chair collaboration orientation. Empirically, I collect the data of the CEOs from a sample of Fortune 500 firms to examine the hypotheses of both studies. The findings support some of the hypotheses and contribute to the literature on CEO external directorships.
Subject
CEO external directorshipsCitation
Li, Chi Hon (2023). Understanding the Antecedents and Consequences of CEO External Directorships. Doctoral dissertation, Texas A&M University. Available electronically from https : / /hdl .handle .net /1969 .1 /198925.