Three Essays on Executives and Boards of Directors

Abstract

This thesis consists of three essays on corporate executives and boards of directors. In the first essay, using comprehensive executive data from 5,886 U.S. firms from 2000 to 2015, I document that the promotion rate for women is 31% lower than the promotion rate for men. While sorting into executive positions in different functional areas explains a substantial portion of the promotion gap, a gap of 20% remains unexplained. Consistent with the presence of taste-based discrimination, the promotion gap is lower in firms in more competitive product markets. I find no evidence that the gap is lower in firms with more female directors, which suggests that board gender quotas may not increase female management representation.

In the second essay, I study CEOs' decisions to fire or retain their subordinates by taking advantage of item 401(b) of Regulation S-K, which requires a company to disclose its executive officers. I find that non-CEO executive departures are highly sensitive to performance. This pattern is stronger for firms that face more stringent monitoring. Contrary to findings in prior literature, this pattern is not simply driven by the CEOs who lose their jobs. In fact, CEOs are more likely to keep their jobs after bad firm performance when their subordinates leave, and executive departures are associated with improvements in future firm performance. My results are consistent with the conjecture that some CEOs fire their subordinates following poor performance and are then rewarded for initiating changes. This study improves our understanding of the factors driving executive and CEO turnover decisions.

In the third essay, I examine whether CEO duality facilitates board decision-making and find that CEO duality is associated with shorter M\&A completion time and higher announcement returns. The beneficial effect is more pronounced in firms that lack lead independent directors, firms that are lightly scrutinized by boards and institutional investors, and firms that operate in competitive and fast-paced environment. While shareholders and regulators advocate splitting the CEO and chair-of-the-board titles, my results suggest that CEO duality is not always detrimental, and intense monitoring restricts CEO chairs’ ability to make speedy and superior decisions.