Board of directors turnover with new board chairs in family firms

Figures & data

Figure 1. Diagram showing the theoretical relationships.

Table 1. Summary Statistics

Variable	N	Mean	Std Dev	Min	P25	P75	Max
Panel A: Turnover Variables in Year t + 3 (2004–2018)
Director exit binary	98,318	0.21	0.41	0.00	0.00	0.00	1.00
Panel B: Board related Variables in Year t (2001–2015)
Family firm binary	104,659	0.27	0.44	0.00	0.00	1.00	1.00
Dual class binary	104,659	0.07	0.26	0.00	0.00	0.00	1.00
Family & Dual	104,659	0.06	0.25	0.00	0.00	0.00	1.00
Ratio independent dir.	104,659	0.79	0.13	0.08	0.71	0.89	1.00
Ratio female director	104,659	0.12	0.10	0.00	0.00	0.18	0.80
Panel C: Director related Variables in Year t (2001–2015)
Director network size	104,659	1,871	2,244	0	420	2,512	22,900
Director year on board	103,420	8.14	6.94	0.00	2.90	11.40	60.90
Director age	103,378	61.71	8.40	27.00	56.00	68.00	99.00
Director qualification	103,420	2.17	1.21	0.00	2.00	3.00	15.00
Director gender	103,420	0.14	0.35	0.00	0.00	0.00	1.00
Panel D: Chairperson related Variables in Year t (2001–2015)
New chairperson	102,953	0.18	0.38	0.00	0.00	0.00	1.00
Chair network size	104,659	1,430	1,674	0	286	1,971	15,674
Chair year on board	102,953	14.42	10.91	0.00	6.40	19.40	67.90
Chair age	102,953	61.36	8.68	29.00	56.00	67.00	99.00
Chair qualification	102,953	1.93	1.08	0.00	1.00	2.00	9.00
Chair gender	102,953	0.02	0.15	0.00	0.00	0.00	1.00
Panel E: Firm related Variables in Year t (2001–2015)
Year-end stock price	102,536	38.33	51.78	0.01	15.82	49.04	2,725
Revenue	102,523	8,686	26,557	0	757	5,979	483,521
Employee size	102,152	27.48	89.54	0.00	2.63	22.45	2,300
Industry classification	102,536	26.68	12.16	1.00	16.00	36.00	47.00

Table 2. Correlation matrix for year 2001–2010

		1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20
1	New chairperson	0.02
2	Family & Dual	−0.01	−0.05
3	Family firm binary	−0.03	−0.09	0.42
4	Dual class binary	0.00	−0.04	0.94	0.38
5	Director network size	−0.03	0.00	−0.05	−0.07	−0.04
6	Director year on board	0.13	−0.04	0.04	0.07	0.02	−0.10
7	Director age	0.14	−0.02	0.01	0.02	0.00	−0.12	0.42
8	Director qualification	−0.04	0.00	−0.05	−0.07	−0.05	0.31	−0.11	−0.05
9	Director gender	−0.03	0.01	0.00	−0.03	0.00	0.12	−0.09	−0.21	0.07
10	Chair network size	0.01	0.00	−0.07	−0.14	−0.04	0.26	−0.04	−0.01	0.10	0.06
11	Chair year on board	−0.03	−0.16	0.19	0.36	0.17	−0.08	0.21	0.10	−0.07	−0.04	−0.22
12	Chair age	−0.02	−0.06	0.08	0.12	0.07	−0.05	0.12	0.16	−0.04	−0.02	−0.17	0.50
13	Chair qualification	0.00	0.01	−0.07	−0.15	−0.06	0.11	−0.01	0.00	0.10	0.02	0.30	−0.15	−0.07
14	Chair gender	0.00	0.02	0.02	0.01	0.01	0.01	−0.02	−0.02	0.01	0.03	0.09	−0.05	−0.05	0.05
15	Ratio independent dir.	0.06	0.00	−0.22	−0.34	−0.23	0.07	0.01	0.02	0.07	0.04	0.16	−0.26	−0.12	0.15	0.03
16	Ratio female director	0.01	0.03	0.02	−0.08	0.03	0.15	−0.03	−0.04	0.08	0.31	0.20	−0.12	−0.07	0.06	0.23	0.18
17	Year-end stock price	−0.02	−0.02	0.02	0.01	0.01	0.06	0.04	0.05	0.02	0.03	0.08	0.02	0.00	0.02	−0.01	0.10	0.07
18	Revenue	0.02	0.00	−0.02	−0.05	−0.02	0.18	−0.02	0.02	0.04	0.06	0.24	−0.06	−0.04	0.08	0.01	0.07	0.16	0.11
19	Employee size	0.01	−0.01	−0.03	−0.01	−0.03	0.14	−0.01	−0.01	0.02	0.05	0.15	0.00	−0.02	0.06	0.01	0.01	0.16	0.09	0.68
20	Industry classification	0.00	0.01	−0.07	−0.01	−0.08	0.00	−0.01	−0.03	−0.02	−0.02	−0.06	0.04	−0.01	−0.05	−0.02	−0.04	−0.05	−0.05	0.07	0.12

Table 3. Fixed effect logit regression model at director’s level for year 2001–2010

	Director exit binary
	1	2	3	4
New chairperson		0.10**	0.11**	0.11**
		−0.02	−0.03	−0.02
Family firm binary		−0.11**	−0.07**
		−0.02	−0.03
Dual class binary		0.13**	0.83**
		−0.04	−0.09
Family & Dual				−0.03
				−0.05
Director network size	−0.00**	−0.00**	−0.00**	−0.00**
	0.00	0.00	0.00	0.00
Director year on board	0.02**	0.02**	0.03**	0.02**
	0.00	0.00	0.00	0.00
Director age	0.03**	0.03**	0.03**	0.03**
	0.00	0.00	0.00	0.00
Director qualification	−0.06**	−0.06**	−0.06**	−0.06**
	−0.01	−0.01	−0.01	−0.01
Director gender	0.01	0.01	0.01	0.01
	−0.03	−0.03	−0.03	−0.03
Chair network size	0.00	0.00	0.00	0.00
	0.00	0.00	0.00	0.00
Chair year on board	−0.01**	−0.01**	−0.01**	−0.01**
	0.00	0.00	0.00	0.00
Chair age	−0.01**	−0.01**	−0.01**	−0.01**
	0.00	0.00	0.00	0.00
Chair qualification	−0.02*	−0.02*	−0.02*	−0.02*
	−0.01	−0.01	−0.01	−0.01
Chair gender	0.02	0.02	0.04	0.01
	−0.07	−0.07	−0.07	−0.07
Ratio independent dir.	0.76**	0.72**	0.74**	0.76**
	−0.09	−0.09	−0.09	−0.09
Ratio female director	0.20	0.18	0.18	0.19
	−0.12	−0.12	−0.12	−0.12
Year-end stock price	−0.00**	−0.00**	−0.00**	−0.00**
	0.00	0.00	0.00	0.00
Revenue	0.00**	0.00**	0.00**	0.00**
	0.00	0.00	0.00	0.00
Employee size	0.00	0.00	0.00	0.00
	0.00	0.00	0.00	0.00
NewChair:FamilyFirm			−0.02
			−0.06
NewChair:DualClass			−0.25*
			−0.11
FamilyFirm:DualClass			−0.82**
			−0.10
NewChair:Family&Dual				−0.36**
				−0.13
Observations	64,717	64,717	64,717	64,717
R^2	0.03	0.03	0.03	0.03
Max. Possible R^2	0.88	0.88	0.88	0.88
Log Likelihood	−67,016	−66,994	−66,961	−67,001
Wald Test	1,925** (df = 15)	1,960** (df = 18)	2,039** (df = 21)	1,953** (df = 18)
LR Test	2,174** (df = 15)	2,218** (df = 18)	2,284** (df = 21)	2,203** (df = 18)
Score (Logrank) Test	2,211** (df = 15)	2,255** (df = 18)	2,339** (df = 21)	2,242** (df = 18)

Note: *p < 0.05; **p < 0.01

Table 4. Pooled ordinary least squares model at firm level for year 2001–2010

	Director exit binary
	1	2	3	4
New chairperson		0.018**	0.021**	0.022**
		−0.006	−0.007	−0.006
Family firm binary		−0.017**	−0.011
		−0.006	−0.006
Dual class binary		0.019*	0.165**
		−0.009	−0.026
Family & Dual				0.000
				−0.010
Director network size	0.000	0.000	0.000	0.000
	0.000	0.000	0.000	0.000
Director year on board	−0.001	−0.001	−0.001	−0.001
	−0.001	−0.001	−0.001	−0.001
Director age	0.001	0.001	0.001	0.001
	−0.001	−0.001	−0.001	−0.001
Director qualification	−0.020**	−0.020**	−0.019**	−0.019**
	−0.005	−0.005	−0.005	−0.005
Director gender	−0.072	−0.073	−0.083*	−0.081*
	−0.041	−0.041	−0.041	−0.041
Chair network size	0.000	0.000	0.000	0.000
	0.000	0.000	0.000	0.000
Chair year on board	−0.001**	−0.001**	−0.001**	−0.001**
	0.000	0.000	0.000	0.000
Chair age	0.000	0.000	0.000	0.000
	0.000	0.000	0.000	0.000
Chair qualification	−0.003	−0.003	−0.003	−0.003
	−0.002	−0.002	−0.002	−0.002
Chair gender	−0.012	−0.009	−0.009	−0.014
	−0.017	−0.017	−0.017	−0.017
Ratio independent dir.	0.122**	0.116**	0.120**	0.120**
	−0.018	−0.018	−0.018	−0.018
Ratio female director	0.131*	0.125*	0.137*	0.140**
	−0.054	−0.054	−0.054	−0.054
Year-end stock price	−0.001**	−0.001**	−0.000**	−0.001**
	0.000	0.000	0.000	0.000
Revenue	0.000*	0.000*	0.000*	0.000*
	0.000	0.000	0.000	0.000
Employee size	0.000	0.000	0.000	0.000
	0.000	0.000	0.000	0.000
Industry classification	0.002	0.002	0.001	0.001
	−0.001	−0.001	−0.001	−0.001
factor(IndustryNo)1	0.042	0.044	0.036	0.038
	−0.049	−0.049	−0.049	−0.049
factor(IndustryNo)2	0.046	0.047	0.031	0.041
	−0.037	−0.038	−0.038	−0.038
factor(year)2009	0.096**	0.097**	0.097**	0.097**
	−0.011	−0.011	−0.011	−0.011
factor(year)2010	0.111**	0.111**	0.111**	0.112**
	−0.011	−0.011	−0.011	−0.011
NewChair:FamilyFirm			−0.002
			−0.014
NewChair:DualClass			−0.059*
			−0.025
FamilyFirm:DualClass			−0.159**
			−0.027
NewChair:Family&Dual				−0.076**
				−0.026
Observations	9,864	9,864	9,864	9,864
R^2	0.068	0.070	0.073	0.070
Adjusted R^2	0.061	0.063	0.066	0.063
F Statistic	135.6** (df = 69; 9795)	130.5** (df = 72; 9792)	126.3** (df = 75; 9789)	130.5** (df = 72; 9792)

Note: *p < 0.05; **p < 0.01

Table 5. Fixed effect logit regression model at director’s level for year 2001–2015

	Director exit binary
	1	2	3	4
New chairperson		0.10**	0.10**	0.11**
		−0.02	−0.02	−0.02
Family firm binary		−0.10**	−0.07**
		−0.02	−0.02
Dual class binary		0.10**	0.74**
		−0.03	−0.08
Family & Dual				−0.07
				−0.04
Director network size	−0.00**	−0.00**	−0.00**	−0.00**
	0.00	0.00	0.00	0.00
Director year on board	0.03**	0.03**	0.03**	0.03**
	0.00	0.00	0.00	0.00
Director age	0.04**	0.04**	0.04**	0.04**
	0.00	0.00	0.00	0.00
Director qualification	−0.04**	−0.04**	−0.04**	−0.04**
	−0.01	−0.01	−0.01	−0.01
Director gender	−0.02	−0.02	−0.02	−0.02
	−0.02	−0.02	−0.02	−0.02
Chair network size	0.00	0.00	0.00	0.00
	0.00	0.00	0.00	0.00
Chair year on board	−0.01**	−0.01**	−0.01**	−0.01**
	0.00	0.00	0.00	0.00
Chair age	−0.01**	−0.01**	−0.01**	−0.01**
	0.00	0.00	0.00	0.00
Chair qualification	−0.02*	−0.02**	−0.02**	−0.02*
	−0.01	−0.01	−0.01	−0.01
Chair gender	0.03	0.04	0.05	0.03
	−0.05	−0.05	−0.05	−0.05
Ratio independent dir.	0.79**	0.75**	0.77**	0.78**
	−0.07	−0.08	−0.08	−0.08
Ratio female director	0.15	0.14	0.15	0.15
	−0.09	−0.09	−0.09	−0.09
Year-end stock price	−0.00**	−0.00**	−0.00**	−0.00**
	0.00	0.00	0.00	0.00
Revenue	0.00**	0.00**	0.00**	0.00**
	0.00	0.00	0.00	0.00
Employee size	0.00	0.00	0.00	0.00
	0.00	0.00	0.00	0.00
NewChair:FamilyFirm			−0.01
			−0.05
NewChair:DualClass			−0.05
			−0.09
FamilyFirm:DualClass			−0.76**
			−0.08
NewChair:Family&Dual				−0.06
				−0.10
Observations	96,302	96,302	96,302	96,302
R^2	0.04	0.04	0.04	0.04
Max. Possible R^2	0.89	0.89	0.89	0.89
Log Likelihood	−103,974	−103,944	−103,906	−103,957
Wald Test	3,650** (df = 15)	3,702** (df = 18)	3,782** (df = 21)	3,681** (df = 18)
LR Test	4,154** (df = 15)	4,213** (df = 18)	4,290** (df = 21)	4,189** (df = 18)
Score (Logrank) Test	4,223** (df = 15)	4,284** (df = 18)	4,374** (df = 21)	4,260** (df = 18)

Note: *p < 0.05; **p < 0.01

Table 6. Fixed effect logit regression model for year 2001–2010 excluding 2008–2009

	Director exit binary
	1	2	3	4
New chairperson		0.08**	0.10**	0.09**
		−0.03	−0.03	−0.03
Family firm binary		−0.13**	−0.09**
		−0.03	−0.03
Dual class binary		0.07	0.78**
		−0.05	−0.10
Family & Dual				−0.11*
				−0.05
Director network size	−0.00*	−0.00*	−0.00*	−0.00*
	0.00	0.00	0.00	0.00
Director year on board	0.02**	0.02**	0.02**	0.02**
	0.00	0.00	0.00	0.00
Director age	0.03**	0.03**	0.03**	0.03**
	0.00	0.00	0.00	0.00
Director qualification	−0.06**	−0.06**	−0.06**	−0.06**
	−0.01	−0.01	−0.01	−0.01
Director gender	0.02	0.02	0.02	0.02
	−0.03	−0.03	−0.03	−0.03
Chair network size	0.00	0.00	0.00	0.00
	0.00	0.00	0.00	0.00
Chair year on board	−0.01**	−0.01**	−0.01**	−0.01**
	0.00	0.00	0.00	0.00
Chair age	−0.01**	−0.01**	−0.01**	−0.01**
	0.00	0.00	0.00	0.00
Chair qualification	−0.02	−0.02	−0.02	−0.02
	−0.01	−0.01	−0.01	−0.01
Chair gender	0.05	0.06	0.07	0.04
	−0.08	−0.08	−0.08	−0.08
Ratio independent dir.	0.64**	0.56**	0.58**	0.60**
	−0.10	−0.10	−0.10	−0.10
Ratio female director	0.18	0.15	0.15	0.17
	−0.13	−0.13	−0.13	−0.13
Year-end stock price	−0.00**	−0.00**	−0.00**	−0.00**
	0.00	0.00	0.00	0.00
Revenue	0.00**	0.00**	0.00**	0.00**
	0.00	0.00	0.00	0.00
Employee size	0.00	0.00	0.00	0.00
	0.00	0.00	0.00	0.00
NewChair:FamilyFirm			−0.02
			−0.07
NewChair:DualClass			−0.31*
			−0.13
FamilyFirm:DualClass			−0.83**
			−0.11
NewChair:Family&Dual				−0.33*
				−0.15
Observations	51,102	51,102	51,102	51,102
R^2	0.03	0.03	0.03	0.03
Max. Possible R^2	0.88	0.88	0.88	0.88
Log Likelihood	−52,438	−52,421	−52,392	−52,425
Wald Test	1,379** (df = 15)	1,401** (df = 18)	1,464** (df = 21)	1,396** (df = 18)
LR Test	1,548** (df = 15)	1,582** (df = 18)	1,639** (df = 21)	1,573** (df = 18)
Score (Logrank) Test	1,579** (df = 15)	1,610** (df = 18)	1,679** (df = 21)	1,602** (df = 18)

Note: *p < 0.05; **p < 0.01

Table

Variable	Description	Source
Panel A: Turnover Variables based on Year t to t + 3 (2004–2018)
Director exit binary	=1 if the director left the board before year t + 3, and zero otherwise	Calculated from BoardEx data
Panel B: Board related Variables in Year t (2001–2015)
Family firm binary	=1 if a founding family or descendants own 5% of more of the common stock (cash flow rights, not voting rights)	Anderson’s website
Dual class binary	=1 if the firm has more than 1 class of common stock, and 0 otherwise	Anderson’s website
Family & Dual	=1 if a founding family or descendants own 5% of more of the common stock & the firm has more than 1 class of common stock, and 0 otherwise	Calculated
Ratio independent dir.	The ratio of independent directors	Calculated from BoardEx data
Ratio female director	The ratio of female directors	Calculated from BoardEx data
Panel C: Director related Variables in Year t (2001–2015)
Director network size	Network size (number of overlaps through employment, other activities, and education)	BoardEx
Director year on board	The time served on the board by the director	BoardEx
Director age	The age of the director	BoardEx
Director qualification	Number of qualifications at undergraduate level and above	BoardEx
Gender	=1 if the director is male, and zero for female	BoardEx
Panel D: Chairperson related Variables in Year t (2001–2015)
New chairperson	=1 if the time on the role by the chairperson is less than 1 year, and 0 otherwise	Calculated from BoardEx data
Chair network size	Network size (number of overlaps through employment, other activities, and education)	BoardEx
Chair year on board	The time served on the board by the chair	BoardEx
Chair age	The age of the chair	BoardEx
Chair qualification	Number of qualifications at undergraduate level and above	BoardEx
Chair gender	=1 if the chairperson is male, and zero for female	BoardEx
Panel E: Firm related Variables in Year t (2001–2015)
Year-end stock price	The firm’s stock price at the end of the year in US dollar	Compustat
Revenue	Net Revenues in million US dollars	Compustat
Employee size	The number of employees in thousand	Compustat
Industry classification	Fama-French 48 Industrial Classifications	Calculated