Do Some Outside Directors Play a Political Role?

Posted: 3 Nov 2000

See all articles by Anup Agrawal

Anup Agrawal

University of Alabama - Culverhouse College of Commerce & Business Administration

Charles R. Knoeber

North Carolina State University - Poole College of Management

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Abstract

If outside directors with backgrounds in politics and in law play a political role, they will be more important on the boards of firms for which politics matters more. We conduct three tests. First, for a sample of manufacturing firms, we find that politically experienced directors are more prevalent in firms where sales to government, exports, and lobbying are greater; lawyer-directors are more prevalent in firms where costs of environmental regulation are higher; and both are more prevalent in larger firms. Second, for a sample of electric utilities during the 1990s when the advent of retail competition made politics more important, we find increased incidence of politically experienced directors. Finally, we explore whether a governmental taste for diversity creates a political role for women directors. Although we document increased incidence of women directors over time, we find little evidence that women directors play a political role.

JEL Classification: G30, K22, L20, L50

Suggested Citation

Agrawal, Anup and Knoeber, Charles R., Do Some Outside Directors Play a Political Role?. Journal of Law and Economics, April 2001. Available at SSRN: https://ssrn.com/abstract=245969

Anup Agrawal (Contact Author)

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Culverhouse College of Business
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Tuscaloosa, AL 35487-0224
United States
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HOME PAGE: http://aagrawal.people.ua.edu/

Charles R. Knoeber

North Carolina State University - Poole College of Management ( email )

Hillsborough Street
Raleigh, NC 27695-8614
United States
919-513-2874 (Phone)
919-515-7873 (Fax)

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