CEOs of small firms must reconcile two countervailing interests with respect to their board composition choices. Boards with substantial representation by “Independent” directors—individuals who are not linked to the CEO via personal or professional relationships—may be more effective in providing good counsel and linkages to external resources, but may also limit CEO discretion. This study investigates whether CEO ownership, family, and generational “stakes” in the business—indicators of CEO desire to protect discretion from board interference—are related to board composition. The results (survey of 2365 small private firms) indicate that CEOs with greater ownership and family stakes have less independent board compositions.
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