Trainspotting: Board Appointments in Private Firms
46 Pages Posted: 7 Aug 2019 Last revised: 18 Jan 2021
Date Written: January 18, 2021
This paper examines how the size of the corporate directors’ labor market affects board appointments in Italian private limited liability firms. As an exogenous shock to a firm’s access to potential non-local directors, we exploit the gradual expansion of the high-speed railway network that improves intercity mobility. We find that the non-local supply of directors increases the positive assortative matching between directors and firms: high-quality firms improve the quality of their boards, while low-quality firms reduce it. We also show that director quality is positively associated with firm growth and productivity, and negatively associated with the probability of default.
Keywords: director supply, board of directors, match quality
JEL Classification: G32, G34
Suggested Citation: Suggested Citation