A Fine-Grained Analysis of Director Dependence: Examining Board Composition In Detail

Abstract

Past corporate governance research that has incorporated the concept of directors'
dependence on the CEO has operationalized dependence in numerous
ways, often aggregating various indicators into a single construct. We extend this
research with an examination of individual indicators of director dependence by
partitioning director relationships into six categories. Relying on agency theory
in combination with other organizational theories, we test hypotheses about relationships
between the different categories of director dependence and the presence
of antitakeover provisions and golden parachutes. We find that reciprocated
interlocks are positively associated, and inside directors are negatively associated.
with the presence ofantitakeover provisions. Implications for theory, method.
and practice are discussed.