Abstract
While existing research on power and CEO dismissal predominantly focuses on CEO power over the board, we examine how CEO power as well as power dynamics among subgroups in the board influence CEO dismissal. We use a faultline approach to identify subgroups in the board based on directors’ demographic attributes (i.e., gender, race, and age) and examine how the power and size of the subgroup that includes the CEO affect the likelihood of CEO dismissal. We argue that the risk of CEO dismissal is reduced when the CEO is more powerful, the CEO belongs to a powerful subgroup, or the CEO belongs to a larger subgroup in the board. Using data from S&P 500 boards, we find that the risk of CEO dismissal decreases as CEO power increases, the power of the CEO’s subgroup (i.e., subgroup including the CEO in the board) increases, and the size of CEO’s subgroup increases.
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