CEO Succession and Proprietary Director: Evidence from Spanish Listed Firms from 2007 to 2010

This study advances research on CEO successions and board monitoring of senior executives by examining how proprietary directors can affect the probability of CEO dismissal. Drawing on our newly developed database covering all CEO successions occurring in all Spanish listed firms during the period 20072010, we propose that proprietary directors may increase the board's monitoring efforts over the chief executive, forcing him to resign in situations of poor performance. The study also addresses belonging to multiple board of directors, offering evidence of the beneficial effects provided by these boards, to allow accumulating experiences and learning by first-hand in other companies. Hypotheses are tested longitudinally, using CEO succession data taken from 111 publicly-traded firs in the Spanish "Mercado continuo" over a fouryear period.