Interlocked executives’ bad reputation in the labor market

This study investigates whether executives who concurrently hold director positions in other firms undergoing reputation-damaging incidents, such as fraud, are more likely to face forced turnovers. Using logistic regression with a matched sample, we find an increased likelihood of CEOs being replaced when their director-position interlocked firms go through negative events. The labor market further penalizes such executives, as the probability is lower for them to keep their current positions and gain new board seats in the future. The results are stronger for firms with higher external governance.