Social connections and involuntary CEO turnover: evidence from the Brazilian market
DOI:
https://doi.org/10.5007/2175-8069.2021.e76116Abstract
This study aimed to investigate whether the social connections between the members of the Board of Directors and the Chief Executive Officer (CEO) decreases the probability of involuntary turnover of the CEO in the Brazilian context. We collected data from Formulário de Referência between 2012 and 2018 of the companies listed on the Brasil Bolsa Balcão [B]3 and developed a Social Connection Index (SCI). Logistic regression results indicate that the probability of involuntary turnover of the CEO decreases as the SCI increases, consistent with the previous studies. Results are significant even in the presence of corporate governance indicators and additional control variables. Results show that the social connections affect the monitoring ability of the Board with respect to the CEO turnover decision. It also shows that the aggregated analysis of the data through the proposed SIC better captures this effect in the Brazilian market.
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