From Backroom to Boardroom: Role of Government Directors in U.S. Public Firms and Their Impact on Performance
Nanyang Technological University (NTU) - Nanyang Business School
University of New South Wales (UNSW) - Australian School of Business; Financial Research Network (FIRN)
December 23, 2013
We examine the role of government directors (outside directors with government experience) on corporate boards. We find that their board presence does not affect the sensitivity of CEO turnover to performance. They are also more likely to miss board meetings and announcements of their appointments are greeted more negatively. Further, firms with government directors experience weaker operating performance and more negative merger announcement returns, but their mergers are less likely to be challenged by antitrust authorities. However, these adverse effects are largely alleviated when firms have high government sales, operate in regulated industries, or have politically connected government directors.
Number of Pages in PDF File: 61
Keywords: corporate governance, board of directors, board effectiveness
JEL Classification: G30, G34, J33working papers series
Date posted: July 23, 2012 ; Last revised: December 24, 2013
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