CEO Outside Board Service and Managerial Ability

Measuring management practices

“…Our model can be extended to allow for testing several theories in the fields of management (e.g., management practices and innovation as in Custódio et al, 2017; or agency problems as in Mutlu et al, 2017), finance (e.g., management practices and risk as in Bonsall IV et al, 2016;value creation in M&As as in Delis et al, 2017), economics (e.g., along the lines of the work of Bloom and Van Reenen, as already discussed; the value of management in the short-and long-run processes of firms as in Sáenz-Royo and Salas-Fumás, 2014), and accounting (e.g., management practices and earnings quality as in Demerjian et al, 2013; tax avoidance as in Koester et al, 2016). Further, a similar model including latent variables can be applied to other difficult-to-measure notions, such as corporate social responsibility (Chen and Delmas, 2011) or risk (Giglio et al, 2016).…”

Benefit or burden? A comparison of CFO and CEO outside directorships

“…Similarly, Mutlu et al. (2017) find that CEO outside directorships reduce managerial ability consistent with investor fears that substantial time commitments distract the CEO. Benson et al.…”

“…The bulk of prior research on executives outside directorships focuses on the CEO. Consistent with the busy director literature, the results of CEO outside directorship research are mixed and suggest that contextual features matter (Geletkanycz & Boyd, 2011; Mutlu et al., 2017). Oh and Barker (2018) find that CEOs with outside directorships imitate R&D investment decisions of the board firm consistent with knowledge transfer.…”

“…Since CEOs are primarily responsible for strategic policies and are the most common executive with an outside directorship, we use CEOs as a baseline and compare CFO to CEO outside directorships. In a broad sample of firms, prior research finds mixed evidence of knowledge transfer from CEO outside directorships (Geletkanycz & Boyd, 2011; Mutlu et al., 2017). However, the theory suggests that variation in knowledge transfer stems from individual director differences including functional experience, such that CFO outside directorship knowledge transfer could differ from that of CEO outside directorship (Shropshire, 2010).…”