The Selection of Directors to Corporate Boards

40 Pages Posted: 19 Jul 2018

See all articles by David J. Denis

David J. Denis

University of Pittsburgh

Diane K. Denis

University of Pittsburgh - Katz School of Business

Mark D. Walker

North Carolina State University

Date Written: July , 2018

Abstract

Corporate spinoffs present a unique opportunity to analyze the choice of directors from a pool of potential candidates. We find that post-spinoff unit and remaining parent firms are more likely to select pre-spinoff parent directors who have: i) relevant industry expertise; and ii) pre-spinoff parent board ties to the post-spinoff CEO. Using pre-spinoff firm performance as a proxy for director quality, the evidence also suggests that firms are more likely to retain high-quality directors. We conclude that firms select individual directors based on both their expertise relevant to firm assets and their ties to CEOs who possess specific information about their ability.

Keywords: Board of directors, Spinoffs, Governance

JEL Classification: G34

Suggested Citation

Denis, David J. and Denis, Diane K. and Walker, Mark D., The Selection of Directors to Corporate Boards (July , 2018). 31st Australasian Finance and Banking Conference 2018. Available at SSRN: https://ssrn.com/abstract=3215474 or http://dx.doi.org/10.2139/ssrn.3215474

David J. Denis

University of Pittsburgh ( email )

Katz Graduate School of Business
Pittsburgh, PA 15260
United States
412-648-1708 (Phone)

Diane K. Denis (Contact Author)

University of Pittsburgh - Katz School of Business ( email )

368B Mervis Hall
Pittsburgh, PA 15260
United States
412-624-0296 (Phone)

Mark D. Walker

North Carolina State University ( email )

Raleigh, NC 27695
United States

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