Performance effects of appointing other firms’ executive directors to corporate boards: an analysis of UK firms

Performance effects of appointing other firms’ executive directors to corporate boards: an... This paper studies the effect on company performance of appointing non-executive directors that are also executive directors in other firms. The analysis is based on a new panel dataset of UK companies over 2002–2008. Our findings suggest a positive relation between the presence of these non-executive directors and the accounting performance of the appointing companies. The effect is stronger if these directors are executive directors in firms that are performing well. We also find a positive effect when these non-executive directors are members of the audit committee. Overall, our results are broadly consistent with the view that non-executive directors that are executives in other firms contribute to both the monitoring and advisory functions of corporate boards. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Performance effects of appointing other firms’ executive directors to corporate boards: an analysis of UK firms

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Publisher
Springer US
Copyright
Copyright © 2014 by Springer Science+Business Media New York
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1007/s11156-014-0460-6
Publisher site
See Article on Publisher Site

Abstract

This paper studies the effect on company performance of appointing non-executive directors that are also executive directors in other firms. The analysis is based on a new panel dataset of UK companies over 2002–2008. Our findings suggest a positive relation between the presence of these non-executive directors and the accounting performance of the appointing companies. The effect is stronger if these directors are executive directors in firms that are performing well. We also find a positive effect when these non-executive directors are members of the audit committee. Overall, our results are broadly consistent with the view that non-executive directors that are executives in other firms contribute to both the monitoring and advisory functions of corporate boards.

Journal

Review of Quantitative Finance and AccountingSpringer Journals

Published: May 10, 2014

References

  • A theory of friendly boards
    Adams, R; Ferreira, D
  • Women in the boardroom and their impact on governance and performance
    Adams, R; Ferreira, D
  • The economics of director heterogeneity
    Anderson, R; Reeb, D; Upadhya, A; Zhao, W
  • Corporate governance and firm operating performance
    Brown, L; Caylor, M

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