Agency Conflicts for Outside Directors During CEO Selection

This paper shows outside directors have an increased chance of obtaining new positions (CEO, COB, directorships) during a CEO turnover year in firms that hire a CEO externally. The new positions are determined by outside directors' CEO hiring source choice (internal or external), not their performance; the opposite is true for inside directors. Further, outside director representation on a board only predicts an external hire if at least one outside director gains a new position while hiring externally. Finally, only firms with outside directors that gain new positions while hiring externally experience cash flow and stock return losses