Co-opted Boards

摘要: We argue that not all independent directors are equally effective in monitoring top management. Specifically, who appointed by the CEO likely to have stronger allegiance and will be weaker monitors. To examine this hypothesis, we propose empirically deploy two new measures of board composition. Co-option is fraction comprised after sitting assumed office. Consistent with serving measure capture, as increases intensity decreases: turnover-performance sensitivity diminishes; pay level but without a commensurate increase pay-performance sensitivity; investment hard assets increases. Further analysis suggests even co-opted less Non-Co-opted Independence –– were already on before office has more explanatory power for effectiveness than traditional independence.