Abstract

This research analyzes and introduces "board laziness"—a term that describes the level of involvement of a company's board of directors—and its influence on selecting the next Chief Executive Officer (CEO), using 1100 succession events among S&P 1500 firms. Our hypothesis suggests that lazy boards are more likely to appoint an insider CEO than an outsider due to a lower engagement in the hiring process. We ran regressions on proxies separately to understand their connections to our dependent variable and also created the Index using ten laziness proxies. We controlled the size, performance, and industry of the firms. Whereas different tests showed a significant and reliable connection between both proxies, index, and the model, results showed a significant negative relationship between board laziness and the likelihood of hiring an insider CEO, indicating that lazier boards tend to favor outsider CEOs. This finding suggests that lazy boards might prefer outsider CEOs to initiate changes and improvements within the organization. Additionally, our research investigates another layer of corporate governance by examining the potential negative impacts of board laziness on Corporate Social Responsibility (CSR) activities. Both studies highlight the significant correlations between board laziness proxies, firm size, and performance. This study aims to enhance the existing corporate governance literature and provide valuable insights into how a board's involvement can impact hiring decisions and offer fresh views on leadership succession. It also opens windows for future research to explore the effects of external shocks, such as financial crises or scandals, on hiring decisions and to consider additional qualitative factors influencing board behavior and decision-making processes.