Determinants of Board Members' Financial Expertise - Empirical Evidence from France
34 Pages Posted: 14 Oct 2008
Date Written: October 14, 2008
Very few countries require directors to be financially literate. This article investigates the determinants of boards' financial expertise using a sample of 95 non-financial French listed firms. We construct a measure of financial expertise based on educational and career background data for 943 individuals occupying 1,140 posts in our sample and explore the determinants of average per-firm financial expertise using a Tobit analysis. We find that average financial expertise is negatively associated with board type (two-tier versus one-tier) and growth opportunities and positively associated with board independence, ownership concentration, and institutional ownership. These findings are robust to sensitivity analyses.
Keywords: Financial expertise, board of directors, supervisory board, corporate governance
JEL Classification: M41, G32, G34, L84
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