Abstract

http://ssrn.com/abstract=2101874
 
 

References (36)



 


 



The Labor Market for Directors and Externalities in Corporate Governance


Doron Levit


University of Pennsylvania - Finance Department

Nadya Malenko


Boston College - Carroll School of Management

October 16, 2014


Abstract:     
This paper studies how directors' reputational concerns affect board structure, corporate governance, and firm value. In our setting, directors affect their firms' governance, and governance, in turn, affects firms' demand for new directors. Whether the labor market rewards a shareholder-friendly or management-friendly reputation is determined in equilibrium and depends on aggregate governance. We show that directors' desire to be invited to other boards creates strategic complementarity of corporate governance across firms. Directors' reputational concerns amplify the governance system: strong systems become stronger and weak systems become weaker. We derive implications for multiple directorships, board size, transparency, and board independence.

Number of Pages in PDF File: 50

Keywords: board of directors, corporate governance, reputation, externalities, strategic complementarity, transparency

JEL Classification: D62, D71, D82, D83, G34, G38, J20

working papers series





Download This Paper

Date posted: July 8, 2012 ; Last revised: October 18, 2014

Suggested Citation

Levit, Doron and Malenko, Nadya, The Labor Market for Directors and Externalities in Corporate Governance (October 16, 2014). Available at SSRN: http://ssrn.com/abstract=2101874 or http://dx.doi.org/10.2139/ssrn.2101874

Contact Information

Doron Levit
University of Pennsylvania - Finance Department ( email )
The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

Nadya Malenko (Contact Author)
Boston College - Carroll School of Management ( email )
140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
HOME PAGE: http://www2.bc.edu/nadya-malenko/
Feedback to SSRN


Paper statistics
Abstract Views: 1,648
Downloads: 331
Download Rank: 51,563
References:  36

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.344 seconds