Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - A Model of the Supply of Executives for Outside Directorships
AU - Conyon, Martin
AU - Read, L
PY - 2006/6
Y1 - 2006/6
N2 - Why do firms allow their executives to accept outsidedirectorships? Are firms acting in the best interests of their shareholders by allowing them to do so? We develop a theoretical model where accepting an outsidedirectorship alters the CEO's effect on the value of the home firm. Our model illustrates that executives will choose to spend more time on external directorships than is optimal for the home firm. Our theoretical model is consistent with other recent empirical finance research on the effects of external directorships.
AB - Why do firms allow their executives to accept outsidedirectorships? Are firms acting in the best interests of their shareholders by allowing them to do so? We develop a theoretical model where accepting an outsidedirectorship alters the CEO's effect on the value of the home firm. Our model illustrates that executives will choose to spend more time on external directorships than is optimal for the home firm. Our theoretical model is consistent with other recent empirical finance research on the effects of external directorships.
KW - Corporate governance
KW - Firm performance
KW - Boards of directors
U2 - 10.1016/j.jcorpfin.2005.08.004
DO - 10.1016/j.jcorpfin.2005.08.004
M3 - Journal article
VL - 12
SP - 645
EP - 659
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
SN - 0929-1199
IS - 3
ER -