Boards of Directors and CEO Turnover in Russian Companies

Boards of directors exist to oversee the activities of the company in protecting shareholders' interests. However, various characteristics of boards of directors can influence the work of the board of directors and even lead to the complete inability of this head. The purpose of this study is to identify significant characteristics of boards of directors that affect the likelihood of a turnover of general directors in the event of poor company performance, which is an indicator of the effectiveness of the board of directors. We use data on Russian companies for the period from 2009 to 2018, containing the main characteristics of the board of directors (gender composition, age composition, share of foreigners, share of insiders, percentage of shares in ownership), as well as accounting and market performance indicators of the company. We find a negative relationship between company performance and the likelihood of a CEO quitting just for an accounting measure. An indirect effect of the company's share in the ownership of members of the board of directors was also revealed, increasing the likelihood of dismissal. The effects of the size of the board of directors and the share of insiders were not found. Thus, the board of directors has limited influence in Russian public companies, which are characterized by the effect of «entrenchment» of CEO.