Former CEO advisors and firm performance

Using unique data on former CEOs taking advisory positions in their former firms in Japan, we investigate the determinants of advisor selection and how this impacts firm performance. We found that retiring CEOs with higher accounting performance and more co-opted boards are more likely to serve in a...

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Bibliographic Details
Published inPacific-Basin finance journal Vol. 79; p. 102034
Main Authors Ogoe, Satoshi, Suzuki, Katsushi
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.06.2023
Subjects
Advisor
CEO turnover
Co-opted board
Corporate governance
Retirement compensation
G32 and G34
Advisor
CEO turnover
Co-opted board
Corporate governance
Retirement compensation
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Summary:Using unique data on former CEOs taking advisory positions in their former firms in Japan, we investigate the determinants of advisor selection and how this impacts firm performance. We found that retiring CEOs with higher accounting performance and more co-opted boards are more likely to serve in advisory positions than those with lower accounting performance and fewer co-opted boards. Additionally, firms with their own former CEOs as advisors tend to perform worse than those without such advisors. Finally, we found that firms with former CEO advisors have lower turnover performance sensitivity toward successor CEOs than those without. These results imply that influential CEOs may become advisors and be involved in successor management even after retirement, which may not be beneficial to shareholders. •We investigate the determinants of former CEO advisors and their impact on firm performance.•We find that advisors are determined by accounting performance and co-opted board.•We also find evidence that the presence of advisors adversely impacts accounting performance.•We interpret that advisors may not be beneficial to firms or shareholders.
ISSN:0927-538X
1879-0585
DOI:10.1016/j.pacfin.2023.102034