Directors: Older and Wiser, or Too Old to Govern?

Directors: Older and Wiser, or Too Old to Govern?

Ronald Masulis, Cong Wang, Fei Xie, Shuran Zhang

Series number :

Serial Number: 

Date posted :

November 21 2018

Last revised :

November 21 2018
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  • boardroom aging • 
  • older directors • 
  • Board monitoring • 
  • board advising • 
  • agency problems

An unintended consequence of recent board governance reforms is that U.S firms are increasingly tapping into pools of older independent directors (OIDs), causing their boards to become substantially older. We document that OIDs display monitoring deficiencies and weaken board oversight.

Firms with more OIDs exhibit worse performance, which is not driven by poorly performing firms subsequently appointing more OIDs. Investors appear to recognize this and react negatively to OID appointments and to raising directors’ mandatory retirement ages. The negative performance effect can sometimes be mitigated or reversed when firms have stronger advisory needs or OIDs provide particularly valuable experience.


Research Member
School of Banking and Finance, Australian School of Business
Real name: 
Cong Wang
Real name: 
Fei Xie
Real name:
Shuran Zhang