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Publications
Publications
  • 2010
  • Working Paper
  • HBS Working Paper Series

Corporate Governance When Founders Are Directors

By: Feng Li and Suraj Srinivasan
  • Format:Print
  • | Language:English
  • | Pages:51
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Abstract

We examine CEO compensation, CEO retention policies, and M&A decisions in firms where founders serve as a director with a non-founder CEO (founder-director firms). We find that founder-director firms offer a different mix of incentives to their CEOs than other firms. Pay for performance sensitivity for non-founder CEOs in founder-director firms is higher and the level of pay is lower than that of other CEOs. CEO turnover sensitivity to firm performance is also significantly higher in founder-director firms compared to non-founder firms. Overall, the evidence suggests that boards with founder-directors provide more high powered incentives in the form of pay and retention policies than the average U.S. board. Stock returns around M&A announcements and board attendance are also higher in founder-director firms compared to non-founder firms.

Keywords

Business Startups; Governing and Advisory Boards; Executive Compensation; Retention; Managerial Roles; United States

Citation

Li, Feng, and Suraj Srinivasan. "Corporate Governance When Founders Are Directors." Harvard Business School Working Paper, No. 11-018, August 2010.
  • SSRN

About The Author

Suraj Srinivasan

Accounting and Management
→More Publications

More from the Authors

    • January 2023
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    The Opioid Settlement and Executive Pay at AmerisourceBergen

    By: Suraj Srinivasan and Li-Kuan Ni
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    • Faculty Research

    Ginkgo Bioworks vs. Scorpion Capital: The Debate Over Related-Party Revenues

    By: Aiyesha Dey, Jonas Heese, Suraj Srinivasan and Annelena Lobb
    • October 2022
    • Faculty Research

    Creating and Measuring Purpose at Viega

    By: Ethan Rouen and Suraj Srinivasan
More from the Authors
  • The Opioid Settlement and Executive Pay at AmerisourceBergen By: Suraj Srinivasan and Li-Kuan Ni
  • Ginkgo Bioworks vs. Scorpion Capital: The Debate Over Related-Party Revenues By: Aiyesha Dey, Jonas Heese, Suraj Srinivasan and Annelena Lobb
  • Creating and Measuring Purpose at Viega By: Ethan Rouen and Suraj Srinivasan
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