Executive Turnover and Outside Directors on Two-Tiered Boards

Abstract

This paper examines the determinants of executive turnover on two-tiered boards, emphasizing the monitoring role of supervisory board members with simultaneous outside directorships. Based on a unique sample of executives from large German firms, we find that outside supervisory board members generally increase executive turnover at the firms they monitor. This influence is especially pronounced when outside supervisory board members are simultaneously active as managers themselves and capital control is rather weak. These results suggest that external managers on supervisory boards enhance the monitoring intensity and substitute for weak capital control in the absence of large shareholders.

Keywords: Corporate Governance, Executive Turnover, Outside Directors, Shareholder Control

JEL Classification: J53, K22, K31, L22