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12/29/2015   Why do CEOs hold non‐executive directorships? An analysis of the role of governance and ownership: Management Decision: Vol 47, No 5

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Management Decision

ISSN: 0025-174 7

Journal of Management History (Archive) merged into Management Decision 

Online from: 1967

Subject Area: Management Science & Operations

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Noel O'Sullivan  (Sheffield University Management School, Sheffield, UK)

Noel O'Sullivan, (2009) "Why do CEOs hold non‐executive directorships? An analysis of the role of governance and ownership", Management Decision, Vol. 47 Iss: 5, pp.760 - 777

http://dx.doi.org/10.1108/00251740910960105

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8/16/2019 Why do CEOs hold non‐executive directorships.pdf

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12/29/2015   Why do CEOs hold non‐executive directorships? An analysis of the role of governance and ownership: Management Decision: Vol 47, No 5

http://www.emeraldinsight.com/doi/full/10.1108/00251740910960105 2/2

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This paper has benefited from the comments of Ray Donnelly, participants at the 2005 Conference of theBritish Academy of Management in Oxford and the anonymous reviewers of this journa l. The researchassistance of Kerry Musson is also gratefully acknowledged.

 – This pape r seeks to investig ate the hold ing of non ‐executive directorships by CEOs in a sample of 387large UK companies. The main ob jective of the paper is to ascertain whether the holding of additionaldirectorships by CEOs is influenced by the governance and ownership characteristics of their companies.

 – The appro ach takes the form o f an empirica l an alysis o f the ho lding of non ‐executive directorships by 387

CEOs of large UK companies.

 – The study finds that 101 CEOs (26 per ce nt) hol d at l east on e no n‐executive directorship but the most anysingle CEO holds is three with the vast majority holding one other directorship . CEOs who also serve as

chairman are more likely to hold non ‐executive directorships while CEOs in companies with greater concentration of external ownership are less likely to hold other directorships . The study finds no evidence

that either non‐executive representation or managerial ownership (including CEO ownership) influences theholding of additional directorships. The holding of additional directorships is positively related to companysize, suggesting that the more complex environment in which CEOs of large companies operate leads to theoffer of additional d irectorships .

 – The findin gs are importan t as they key in to an ongo ing deba te on whether the ho ldin g of a ddition aldirectorships by CEOs is consistent with good go vernance practice. The evidence p resented here providesmixed information for governance regulators. While a significant majority of CEOs do not hold additionaldirectorships , there is evidence that weaker board a nd external ownership monitoring is associated with agreater likelihood that CEOs will sit on other boards.

Corporate governance, Boards, Chief e xecutives, Directors

Research paper 

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