Board Leadership and CEO Departures in Entrepreneurial Firms

This paper examines the assignment of leadership positions in the newly formalized boards of directors of entrepreneurial firms at their initial public offering (IPO). We find that higher status directors are more likely to be assigned chair positions of various committees and the overall board. Importantly, when directors are under-valued in these assignments of leadership positions, the CEO is more likely to be dismissed. We suggest that this occurs because under-valued directors engage in negative and uncooperative behaviors towards the CEO who is typically a central figure in assigning the newly available chair positions at IPO. Our study offers a richer understanding of venture board evolution at the key milestone of IPO, broadens the extant view of board leadership beyond CEO duality, and highlights the unintended negative consequences of the mandatory board committee structure at IPO. We also contribute a novel, socially-informed logic of CEO departures beyond the traditional focus on firm performance. Overall, we advance a more nuanced view of board leadership and its organizational implications. Keywords: Ventures, Board of directors, CEO departures