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  • 2012 Fall: Volume 10, Issue 2
  • Board Changes in Response to Extremes in Performance

    • Gerhard Barone ;
    • Kent Hickman ;
    • Mark Shrader

    Use this link to view the PDF file: Board Changes in Response to Extremes in Performance

    Title:

    Board Changes in Response to Extremes in Performance

    Author(s):

    Gerhard Barone
    Kent Hickman
    Mark Shrader

    Publication Date:

    2012

    Journal Title:

    The Journal of Finance Issues

    Volume Number:

    10

    Issue Number:

    2

    Abstract:

    This study contrasts changes in board structure in firms at the extremes of industryadjusted performance. We find pervasive changes in board size, composition, and director pay for firms whose stock market performance ranks in the uppermost and lowest deciles of industryadjusted returns over the period 2001-2005. Our evidence shows that these companies tended to change their board’s size, added outsiders to the board, and increased director pay. Significant differences between the two groups are documented, with poor performers making more dramatic changes in all three of these governance metrics. We failed to find changes in other structural characteristics such as classified boards and shareholdings of directors.

    First Page:

    24

    Last Page:

    29

    Total Pages:

    5