Open AccessThe role of the independent director in CEO supervision and turnover
Author(s) -
Guido Stein,
Salvador Plaza
Publication year - 2011
Publication title -
corporate ownership and control
Language(s) - English
Resource type - Journals
eISSN - 1810-0368
pISSN - 1727-9232
DOI - 10.22495/cocv9i1art2
Subject(s) - independence (probability theory) , accounting , business , principal–agent problem , executive director , agency (philosophy) , function (biology) , management , quality (philosophy) , process (computing) , public relations , corporate governance , finance , political science , economics , sociology , computer science , social science , statistics , philosophy , mathematics , epistemology , evolutionary biology , biology , operating system
A considerable amount of research has been done on the figure of the CEO, approaching it from many angles. Our analysis focuses on the role played by the independent director in the supervision and turnover of the chief corporate executive. In the process, we have carried out a comprehensivereflection on the independent director, consulting the latest literature and including the results of the most recent empirical evidence. We have noticed that the role of the independent director often goes beyond the tasks that are usually considered specific to this function, namely, supervision of thecompany’s senior management. However, the directors’ independence cannot be built by requirements. It is a personal quality of the individual that transcends the various problems raised by agency theory. We believe that correct CEO supervision can only be effectively undertaken if the independent directors have these personal qualities. It seems that companies with a larger number of independent directors are more likely to replace the CEO when performance is not as expected. This can only happen if the independent directors enjoy effective independence.