Independent and Outside Directors

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
• 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.