The effects of board human and social capital on investor reactions to new CEO selection

This study extends work on independent directors to examine the influence of their human capital and social capital on investor reactions to the board's CEO selection decision. We predict that human capital, as represented by the board's CEO experience and industry experience, and social c...

Full description

Saved in:
Bibliographic Details
Published in:Strategic management journal 2011-07, Vol.32 (7), p.731-747
Main Authors: Tian, Jie (Jenny), Haleblian, Jerayr (John), Rajagopalan, Nandini
Format: Article
Language:English
Subjects:
Board of directors
Business management
Business organization
Business strategies
Business structures
CEO selection
Chief executive officers
Corporate strategies
Decision analysis
Extractive industries
Human capital
Investors
Leadership
Management research
Management science
Management techniques
Organizational analysis
Outside directors
Securities markets
Senior management
Social capital
stock market reaction
Stock markets
Studies
Succession planning
U.S.A
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This study extends work on independent directors to examine the influence of their human capital and social capital on investor reactions to the board's CEO selection decision. We predict that human capital, as represented by the board's CEO experience and industry experience, and social capital, as represented by directors' co-working experience on the board and external directorship ties to other corporate boards, will influence the stock market reactions to new CEO appointments. In a sample of 208 new CEO appointment events in U.S. manufacturing firms between 1999 and 2003, we found that the stock market reacted favorably to the appointments made by boards with higher levels of human and social capital. We also found that the effect of internal social capital was stronger when the new CEO was an insider rather than an outsider. The implications of the results for director selection and CEO succession are discussed.
ISSN:0143-2095
1097-0266
DOI:10.1002/smj.909