Independent and Outside Directors

Independent and Outside Directors

By
David F. Larcker, Brian Tayan
CGRI Research Spotlight Series. Corporate Governance Research Initiative (CGRI), November
2015

This Research Spotlight provides a summary of the academic literature on outside (non-executive) directors and directors who are independent according to New York Stock Exchange listing requirements. It reviews the evidence of:

  • Shareholder reaction to the appointment of outside directors
  • The relation between outside directors and performance
  • The relation between outside directors and mergers and acquisitions
  • The relation between outside directors and CEO compensation
  • Factors that influence the “independence” of outside directors

This Research Spotlight expands upon issues introduced in the Quick Guide Board of Directors: Structure and Consequences.