The Labor Market for Corporate Directors

53 Pages Posted: 1 Oct 2015 Last revised: 2 Dec 2016

See all articles by Egor Matveyev

Egor Matveyev

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: February 2016

Abstract

This paper empirically analyzes the labor market for corporate directors and the role compensation plays in this market. Since salaries are not individually negotiated with directors, preferences of directors and firms, rather than wages, determine market outcomes. I estimate preferences from a two-sided matching model and use them in counterfactual experiments. Increasing director pay by $150,000 a year per director allows less desirable firms to attract a better pool of directors. This result suggests that firms can effectively use compensation to build better boards. The framework developed here is used to analyze other important market segments, such as the market for CEO directors.

Keywords: Director labor market, director compensation, two-sided matching model, structural estimation

Suggested Citation

Matveyev, Egor, The Labor Market for Corporate Directors (February 2016). Available at SSRN: https://ssrn.com/abstract=2667968 or http://dx.doi.org/10.2139/ssrn.2667968

Egor Matveyev (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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E62-621
Cambridge, MA 02142
United States

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