Bankers on the Board and CEO Turnover

The governance literature finds that independent directors from lending banks (commercial bank directors or CBDs) bring both financial expertise and conflict of interest between shareholders and debt holders. We examine how the presence of CBDs affects the implicit incentive of CEO turnover. Using BoardEx and DealScan data, we hypothesize and find that CBDs make the CEO turnover more sensitive to both performance and risk. Post-CEO turnover analysis reveals that firm performance improves and risk decreases in the presence of CBDs.