Can board refreshment mitigate managerial power: New evidence from the MENA region

This study investigates the impact of director refreshment on managerial power in the MENA (Middle East and North Africa) region, a phenomenon often linked to insufficient oversight and increased agency conflicts. We develop a weighted board refreshment index based on seven director attributes to evaluate its effect on three measures of CEO power: managerial entrenchment, duality, and tenure. Our analysis covers 494 publicly traded companies in seven MENA countries from 2007 to 2022, totaling 3912 firm-year observations. The results show that board refreshment significantly reduces all three aspects of managerial power. Additionally, we highlight the crucial role of each refreshment attribute in diminishing managerial control. Overall, this research not only applies the board refreshment index introduced by Dah et al. (2024) in a novel context but also contributes to the literature by demonstrating the effectiveness of board refreshment in enhancing monitoring and board performance.