Abstract
How Independent Board Chair Power and Compensation Influence the Likelihood of CEO Dismissal
Academy of Management Annual Meeting Proceedings, Vol.2026(1)
07/2026
DOI: 10.5465/AMPROC.2026.11394abstract
Abstract
A core assumption in corporate governance research rooted in agency theory is that independent board chairs direct the board’s monitoring efforts in alignment with board and shareholder interests. This neglects a second-order principal-agent problem: an independent board chair is an agent in their own right with their own incentives and motives. Our theory highlights this second-order principal-agent problem within the boardroom in the context of CEO dismissal. Specifically, we argue that powerful independent board chairs, ceteris paribus, will prefer not to engage in CEO dismissal, and as such will use what power they have to discourage CEO dismissal in the context of poor firm performance. However, when adequately compensated, independent board chairs’ preferences can shift into alignment with those of the principals because chair compensation changes how board chairs use their power. A quantitative analysis of S&P 500 firms from 2010 to 2019 supports our predictions and provides evidence for a critical, previously neglected agency problem within the board of directors.
Details
- Title: Subtitle
- How Independent Board Chair Power and Compensation Influence the Likelihood of CEO Dismissal
- Creators
- Gian-Luca Angelo Asquini - University of ZurichRyan Adam Krause - University of IowaThomas Keil - University of Zurich
- Resource Type
- Abstract
- Publication Details
- Academy of Management Annual Meeting Proceedings, Vol.2026(1)
- DOI
- 10.5465/AMPROC.2026.11394abstract
- eISSN
- 2151-6561
- Language
- English
- Date published
- 07/2026
- Academic Unit
- Management and Entrepreneurship
- Record Identifier
- 9985214113202771
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