Trainspotting: Board Appointments in Private Firms
47 Pages Posted: 7 Aug 2019 Last revised: 15 Oct 2020
Date Written: October 14, 2020
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 commuting. 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