Document Type

Article

Comments

Publisher's DOI: https://doi.org/10.1142/S2010139219400044

Keywords

board member departures; CEO compensation; compensation; harvester directors; venture capital; corporate governances

Identifier Data

10.2139/ssrn.3042780

Publisher

World Scientific

Abstract

I examine the effects of board member departures on CEO compensation using a sample of high growth IPO firms. Agency theory predicts that a reduction in board monitoring by harvester directors (VCs and private equity investors) will result in an increase in CEO pay. I find that departures of the last harvester director on a board result in an immediate and lasting increase in CEO equity compensation, while prior departures by other harvester directors are not significant. The results hold even when controlling for other governance mechanisms such as CEO wealth, CEO turnover, board composition, and external blockholder ownership.

Available for download on Thursday, January 30, 2020

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