The independence of corporate boards is a serious concern to shareholders and regulators. The influence CEOs have over director appointments accentuates this concern. It is not uncommon to see CEOs appointing directors with personal or business ties (e.g., relatives, friends, or business associates). However, such appointments are likely to invite close scrutiny. CEOs can also use their influence more subtly by strategically nominating independent outside directors with certain expertise, knowledge, experiences, and skills.
Strategic director appointments have received little attention in the literature, which has tended to focus on what makes the board effective (e.g., independence, expertise, and size). In … Read more