Corporate governance when founders are directors
By: Feng Li, Suraj Srinivasan
Contributors: Srinivasan, Suraj; Harvard Business School
Series: Working paper / Harvard Business School -- 11-018; Working paper (Harvard Business School) -- 11-018.
Publisher: Harvard Business School
Published: 2010
Place of publication: [Boston]
Language: eng
Number of pages: 50
Description: We examine CEO compensation, CEO retention policies, and M&A decisions in firms where founders serve as a director with a non-founder CEO (founder-director firms). We find that founder-director firms offer a different mix of incentives to their CEOs than other firms. Pay for performance sensitivity for non-founder CEOs in founder-director firms is higher and the level of pay is lower than that of other CEOs. CEO turnover sensitivity to firm performance is also significantly higher in founder-director firms compared to non-founder firms. Overall, the evidence suggests that boards with founder-directors provide more high powered incentives in the form of pay and retention policies than the average U.S. board. Stock returns around M&A announcements and board attendance are also higher in founder-director firms compared to non-founder firms.
Notes: "August 2010"--Publisher's website.

Includes bibliographical references.