Human and Social Capital in the Labor Market for Directors
33 Pages Posted: 29 Jan 2016
Date Written: 2013
We examine the director labor market to better understand which director attributes are important for board service. We find that general skills and director connections are valued in the market for directors in that both increase the likelihood of individuals gaining a board seat. Among specific director characteristics, financial expertise, holding an MBA degree, and S&P 500 experience are positively associated with gaining new board appointments. Moreover, regardless of the director’s level of expertise, highly connected individuals are more likely to obtain new appointments. Finally, from a range of characteristics, only director connections mitigate the negative consequences of serving on the boards of firms that restate their financials.
Keywords: Boards of Directors, Human Capital, Social Capital, Director Selection, Director Effectiveness, Networks
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