A Fine-Grained Analysis of Director Dependence: Examining Board Composition In Detail

Abstract

Past corporate governance research that has incorporated the concept of directors'dependence on the CEO has operationalized dependence in numerousways, often aggregating various indicators into a single construct. We extend thisresearch with an examination of individual indicators of director dependence bypartitioning director relationships into six categories. Relying on agency theoryin combination with other organizational theories, we test hypotheses about relationshipsbetween the different categories of director dependence and the presenceof antitakeover provisions and golden parachutes. We find that reciprocatedinterlocks are positively associated, and inside directors are negatively associated.with the presence ofantitakeover provisions. Implications for theory, method.and practice are discussed.