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Interlocked executives’ bad reputation in the labor market

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  • Tang, Ning
  • Chen, Jianqiang
  • Lin, Chih-Yung
  • Tuan, Le Quoc

Abstract

This study investigates whether executives who concurrently hold director positions in other firms undergoing reputation-damaging incidents, such as fraud, are more likely to face forced turnovers. Using logistic regression with a matched sample, we find an increased likelihood of CEOs being replaced when their director-position interlocked firms go through negative events. The labor market further penalizes such executives, as the probability is lower for them to keep their current positions and gain new board seats in the future. The results are stronger for firms with higher external governance.

Suggested Citation

  • Tang, Ning & Chen, Jianqiang & Lin, Chih-Yung & Tuan, Le Quoc, 2024. "Interlocked executives’ bad reputation in the labor market," Finance Research Letters, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011601
    DOI: 10.1016/j.frl.2023.104788
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate networks; Interlocking directorates; Managerial turnovers; Fraud; Ownership;
    All these keywords.

    JEL classification:

    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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