This Research Spotlight provides a summary of the academic literature on outside (non-executive) directors and directors who are independent according to New York Stock Exchange listing requirements. It reviews the evidence of: Shareholder reaction to the appointment of outside directors, the relation between outside directors and performance, the relation between outside directors and mergers and acquisitions, the relation between outside directors and CEO compensation, and factors that influence the “independence” of outside directors. This Research Spotlight expands upon issues introduced in the Quick Guide Board of Directors: Structure and Consequences.
Copyright held by David F. Larcker and Brian Tayan. Further inquiries about reproduction and use should be directed to the Corporate Governance Research Initiative.
