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Directors: Older and Wiser, or Too Old to Govern?
Published online by Cambridge University Press: 18 October 2023
Abstract
An unintended consequence of recent governance reforms in the United States is firms’ greater reliance on older director candidates, resulting in noticeable board aging. We investigate this phenomenon’s implications for corporate governance. We document that older independent directors exhibit poorer board meeting attendance, are less likely to serve on or chair key board committees, and receive less shareholder support in annual elections. These directors are associated with weaker board oversight in acquisitions, CEO turnovers, executive compensation, and financial reporting. However, they can also provide particularly valuable advice when they have specialized experience or when firms have greater advisory needs.
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- Research Article
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- © The Author(s), 2023. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington
Footnotes
We thank an anonymous referee, Jack Bao, Bernard Black, Dan Bradley, Jennifer Conrad (the editor), Francois Derrien, Ran Duchin, Charles Elson, Laura Field, Dirk Jenter, Feng Jiang, Tao Shu, Stefan Zeume, and participants at the 2017 American Finance Association annual meetings, the 2016 China International Conference in Finance, the 2016 Conference on Empirical Legal Studies in Europe, the 2018 Financial Intermediation Research Society Conference, Tsinghua University, and the University of Connecticut for valuable comments. We also extend our gratitude to Dirk Jenter for sharing data on CEO turnovers, Tracie Woidtke and Matthew Serfling for sharing their director-specific quality measures, and Zonghe Guo and Nicholas Turner for outstanding research assistance.
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