We study firms adopting stock-option plans for outside directors in a sample of Fortune 1000 firms from 1997 to 1999. Fixed-effects models accounting for self-selectivity bias indicate that companies with such plans have higher market-to-book ratios and profitability metrics. Option plan...

Firms with busy boards, those in which a majority of outside directors hold three or more directorships, are associated with weak corporate governance. These firms exhibit lower market-to-book ratios, weaker profitability, and lower sensitivity of CEO turnover to firm performance. Independent...

We examine the characteristics of firms that adopt stock-option plans for outside directors using a sample of 2,088 firm-year observations of Fortune 1000 firms from 1997-1999. Using fixed-effects models that account for self-selectivity bias, we find that firms with outside director option...