References (28)





Director Characteristics and Firm Performance

Pascal A. Gantenbein

University of Basel

Christophe Volonté

University of Basel

January 21, 2013

The traditional methodology of studies examining optimal composition of boards typically relates a simple board variable (e.g., independence of board members or board demography) to firm performance, at the same time ignoring many other potentially relevant board characteristics. In reality, however, board members predominantly are selected upon their business skills. Given the practical importance of these criteria, we investigate how directors’ education and business experience affect firm performance. The sample consists of 4,027 directorships from 559 firm-year observations in Switzerland. Using OLS and including control variables, we show that boards on average are composed according to the firms’ needs in terms of education and industrial knowledge. Furthermore, industrial knowledge and Tobin’s Q are negatively correlated especially if the firm has more divisions, showing that in highly diversified firms, general management skills are more important as opposed to specific industrial knowledge. In addition, director fixed effects, i.e. unobserved characteristics such as, e.g., talent, are significant and improve the explanatory power of the models by 5 percent.

Keywords: Corporate governance, Board of directors, Director characteristics, Education and business experience

JEL Classification: G30, G34, G38

working papers series

Not Available For Download

Date posted: July 1, 2011 ; Last revised: September 13, 2014

Suggested Citation

Gantenbein, Pascal A. and Volonté, Christophe, Director Characteristics and Firm Performance (January 21, 2013). Available at SSRN: http://ssrn.com/abstract=1875710 or http://dx.doi.org/10.2139/ssrn.1875710

Contact Information

Pascal A. Gantenbein
University of Basel ( email )
Petersplatz 1
Basel, CH-4003
HOME PAGE: http://wwz.unibas.ch/abteilungen/home/abteilung/fmgt/
Christophe Volonté (Contact Author)
University of Basel ( email )
Peter Merian-Weg 6
Basel, CH-4002
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