Research summary: Corporate scandals of the previous decade have heightened attention on board independence. Indeed, boards at many large firms are now so independent that the CEO is “home alone” as the lone inside member. We build upon “pro‐insider” research within agency theory to explain how the growing trend toward lone‐insider boards affects key outcomes and how external governance forces constrain their impact. We find evidence among S&P 1500 firms that having a lone‐insider board is associated with (a) excess CEO pay and a larger CEO‐top management team pay gap, (b) increased likelihood of financial misconduct, and (c) decreased firm performance, but that stock analysts and institutional investors reduce these negative effects. The findings raise important questions about the efficacy of leaving the CEO “home alone.” Managerial summary: Following concerns that insider‐dominated boards failed to protect shareholders, there has been a push for greater board independence. This push has been so successful that the CEO is now the only insider on the boards of more than half of S&P 1500 firms. We examine whether lone‐insider boards do in fact offer strong governance or whether they enable CEOs to benefit personally. We find that lone‐insider boards pay CEOs excessively, pay CEOs a disproportionately large amount relative to other top managers, have more instances of financial misconduct, and have lower performance than boards with more than one insider. Thus, it appears that lone‐insider boards do not function as intended and firms should reconsider whether the push towards lone‐insider boards is actually in shareholders' best interests. Copyright © 2017 John Wiley & Sons, Ltd.

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Recent family business research has focused on transgenerational intent (TI)—the plan to pass management of the business to future generations—as a defining characteristic of family firms. We theorize that TI is influenced by the current leader's consideration of factors related to three subsystems (business, ownership, and family) that underlie the family business system. Specifically, we hypothesize that characteristics of the business (the age and size of the firm), the owners (gender and minority status), and the family, specifically the family's engagement in the firm (time until succession and the family's role in advising the CEO) influence the current leader's TI. Results based on a survey of over 700 family‐managed firms are largely supportive of our hypotheses. Understanding what affects TI will help advance researchers' efforts to develop a theory of the family firm.

We highlight a largely unstudied phenomenon that affects postacquisition performance: nested acquisitions. Nested acquisitions occur when a firm acquires a target firm that has itself recently acquired another firm. In our study of publicly traded U.S. acquirers and targets from 2000 to 2014, we theorize that nested acquirers face unique integration difficulties that reduce acquirer postacquisition performance. Specifically, we build on Penrosian logic and theorize that nested acquisitions tax the managerial capacity of the acquiring and acquired firms more than nonnested ones and that, as nested acquisition complexity increases due to variance within the embedded nested targets (i.e., greater number, more recent, less related, and larger nested targets), the drain on managerial capacity also increases. Ultimately, these challenges increase the likelihood of reduced postacquisition performance. Given these suggested difficulties, we theorize that retaining focal target managers can aid the acquiring firm and thereby help to reduce negative performance outcomes. In our unique sample of matched-pair firms, we find that nested acquisitions are associated with lower postacquisition performance but that retaining target firm managers can reduce this effect.

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