How do independent directors view generalist vs. specialist CEOs? Evidence from an exogenous regulatory shock

Pattanaporn Chatjuthamard; Pornsit Jiraporn; Sirimon Treepongkaruna

doi:10.1016/j.irfa.2021.101957

How do independent directors view generalist vs. specialist CEOs? Evidence from an exogenous regulatory shock

Pattanaporn Chatjuthamard
, Pornsit Jiraporn
, Sirimon Treepongkaruna

Management Division (Great Valley)

Research output: Contribution to journal › Article › peer-review

10 Scopus citations

Abstract

Exploiting the passage of the Sarbanes-Oxley Act as a quasi-natural experiment, we explore how independent directors view generalist vs. specialist CEOs. Generalist CEOs possess the general managerial skills that can be applied across firms and industries. Our difference-in-difference estimates show that independent directors view generalist CEOs unfavorably. Firms forced to raise board independence experience a lower increase in CEO general ability than those not required to change board composition. Additional analysis confirms the results, including fixed- and random-effects regressions, propensity score matching, instrumental-variable analysis, and Oster's (2019) technique for testing coefficient stability.

Original language	English (US)
Article number	101957
Journal	International Review of Financial Analysis
Volume	78
DOIs	https://doi.org/10.1016/j.irfa.2021.101957
State	Published - Nov 2021

All Science Journal Classification (ASJC) codes

Finance
Economics and Econometrics

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abstract = "Exploiting the passage of the Sarbanes-Oxley Act as a quasi-natural experiment, we explore how independent directors view generalist vs. specialist CEOs. Generalist CEOs possess the general managerial skills that can be applied across firms and industries. Our difference-in-difference estimates show that independent directors view generalist CEOs unfavorably. Firms forced to raise board independence experience a lower increase in CEO general ability than those not required to change board composition. Additional analysis confirms the results, including fixed- and random-effects regressions, propensity score matching, instrumental-variable analysis, and Oster's (2019) technique for testing coefficient stability.",

author = "Pattanaporn Chatjuthamard and Pornsit Jiraporn and Sirimon Treepongkaruna",

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AU - Treepongkaruna, Sirimon

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AB - Exploiting the passage of the Sarbanes-Oxley Act as a quasi-natural experiment, we explore how independent directors view generalist vs. specialist CEOs. Generalist CEOs possess the general managerial skills that can be applied across firms and industries. Our difference-in-difference estimates show that independent directors view generalist CEOs unfavorably. Firms forced to raise board independence experience a lower increase in CEO general ability than those not required to change board composition. Additional analysis confirms the results, including fixed- and random-effects regressions, propensity score matching, instrumental-variable analysis, and Oster's (2019) technique for testing coefficient stability.

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How do independent directors view generalist vs. specialist CEOs? Evidence from an exogenous regulatory shock

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