Not Clawing the Hand that Feeds You: The Case of Co-opted Boards and Clawbacks

• Autores: Sterling Huang, Chee Yeow Lim, Jeffrey Ng
• Localización: European accounting review, ISSN 0963-8180, Vol. 28, Nº 1, 2019, págs. 101-127
• Idioma: inglés
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• Resumen

  • We examine how board co-option, defined as the fraction of the board comprising directors appointed after the CEO assumed office, is related to clawback adoption. We find that co-opted boards have a lower probability of adopting clawback provisions. Further, the negative association between board co-option and clawback adoption is more pronounced when at least one co-opted member is on the compensation committee and when there is a higher likelihood that a clawback provision will be triggered. Finally, we find that board co-option is an important mechanism through which longer tenured CEOs reduce the likelihood of clawback adoption.