CEOs' political beliefs sway some directors to leave: Study

If incoming CEOs are not on the same side of the political aisle as the directors on their new boards, exits might ensue, according to a recent study from the University of Notre Dame (Ind.). 

Researchers analyzed directors on the boards of publicly traded firms between 2008 and 2012. They examined the Federal Election Commission's individual political donation records to estimate political ideology scores for each director and incoming CEOs. 

Their results showed that directors who disagree politically with a new CEO are more likely to leave the board, while directors who agree with the new CEO are more likely to stay. 

However, political disagreements are more likely to spur exits than agreements are to guarantee retention. For example, a liberal director is more apt to leave once a conservative CEO is appointed than a conservative director is apt to stay. 

"Broadly speaking, the study reveals that individuals tend to internalize political 'hatred' or intolerance more than they do acceptance," wrote Shannon Rodel in an article for the university's Mendoza College of Business. 

Additionally, the study found that when a political disagreement occurs, it is less likely to cause an exit if the two parties have some experience with one another and "can evaluate each other on other merits," according to John Busenbark, PhD, assistant professor of management and organization at the university.

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