How Are CEOs Fired?

CEOs are more likely to be dismissed when their firm is the worst performer within directors’ networks of interlocked boards. The effects persist after including granular fixed effects, controlling for nonlinear, absolute, and industry-relative performance, and in analyses of exogenous director turnovers and falsification tests. Interlock-benchmarked dismissals are followed by performance declines, analyst downgrades, and lower announcement returns, suggesting that these dismissals are not easily explained as value-enhancing responses to poor performance. Our findings highlight a novel channel through which interlocking boards shape governance and shareholder value: implicit relative performance benchmarks.