Trainspotting: Board Appointments in Private Firms

50 Pages Posted: 24 Jul 2020

See all articles by Audinga Baltrunaite

Audinga Baltrunaite

Bank of Italy

Egle Karmaziene

VU University Amsterdam; Swedish House of Finance

Multiple version iconThere are 3 versions of this paper

Date Written: June 26, 2020


We examine how the size of the corporate directors’ labor market affects the quality of board appointments in Italian private firms. To establish the causality of the relationship, we exploit exogenous variations in firms’ access to non-local potential directors following the gradual introduction of a high-speed train, which improved rail connections between cities. Using administrative data on board members belonging to the universe of limited liability companies and a two-way fixed-effects model, we obtain time-invariant measures of firm and director quality. We demonstrate that a positive shock to the non-local director supply increases positive assortative matching between firms and directors. High-quality firms improve the quality of their boards, while lower-quality firms attract lower quality directors. The effect arises from a more active re-matching along the high-speed train line. Our results further suggest that the private firms’ boards with higher quality directors are associated with higher firm growth and productivity, and a lower probability of default.

Keywords: director supply, board of directors, match quality

JEL Classification: G32, G34

Suggested Citation

Baltrunaite, Audinga and Karmaziene, Egle, Trainspotting: Board Appointments in Private Firms (June 26, 2020). Bank of Italy Temi di Discussione (Working Paper) No. 1278, Available at SSRN: or

Audinga Baltrunaite (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184

Egle Karmaziene

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081HV

Swedish House of Finance ( email )

Drottninggatan 98
Stockholm, 111 60

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