Performance Effects of Appointing Other Firms' Executive Directors to Corporate Boards: An Analysis of UK Firms

38 Pages Posted: 22 Feb 2014

See all articles by Alexander Muravyev

Alexander Muravyev

Saint Petersburg Branch National Research University Higher School of Economics; Institute for the Study of Labor (IZA)

Oleksandr Talavera

Swansea University - School of Management

Charlie Weir

Robert Gordon University - Aberdeen Business School

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 relationship 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.

Keywords: executive directors, non-executive directors, company performance

JEL Classification: G34, G39

Suggested Citation

Muravyev, Alexander and Talavera, Oleksandr and Weir, Charles, Performance Effects of Appointing Other Firms' Executive Directors to Corporate Boards: An Analysis of UK Firms. IZA Discussion Paper No. 7962. Available at SSRN: https://ssrn.com/abstract=2399802

Alexander Muravyev (Contact Author)

Saint Petersburg Branch National Research University Higher School of Economics ( email )

Kantemirovskaya str. 3a
St. Petersburg, 194000
Russia

HOME PAGE: http://https://www.hse.ru/en/org/persons/127811036

Institute for the Study of Labor (IZA) ( email )

Schaumburg-Lippe-Str. 5-9
Bonn, D-53113
Germany

HOME PAGE: http://www.iza.org/en/webcontent/index_html

Oleksandr Talavera

Swansea University - School of Management ( email )

Haldane Building
Singleton Park
Swansea, SA2 8PP
United Kingdom

Charles Weir

Robert Gordon University - Aberdeen Business School ( email )

Garthdee Road
RGU
Aberdeen AB10 7QE
United Kingdom
0044 1224 263800 (Phone)
0044 1224 263838 (Fax)

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