When Bad Corporate Governance is Mistaken for Good

This interesting article in The Journal of Financial Economics focuses on board director reputation with respect to forced CEO turnover; namely the reputation effects on the board directors involved in such an event as was just seen at Intel.

The article features the research that shows contrary to common belief that a forced CEO turnover demonstrates effective board monitoring - the opposite may be perceived, especially if succession planning appears to have been neglected. Directors involved in such an event carries a reputation risk of being involved in a governance failure at the board level. The fallout can have lasting implications for the director's career; indeed being more likely to exit the board labor market and have less prestigious appointments.

Given this new found understanding it will be interesting to see what changes; will there be fewer forced CEO turnovers? Will boards that a more hands on approach to leadership oversight?

https://lnkd.in/guakpdmZ