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Director selection; Boards of directors; Director labor market
Director selection is crucial in corporate governance, but little is known about the relative importance of individual director attributes in the selection process. We examine the motives for director selection using the empirical setting of mergers, which offers a well-defined pool of candidates considered and a discrete shock to a board’s monitoring and advising needs.
We find that boards increase director expertise tied to these changing needs, even in cases with powerful CEOs that could opportunistically weaken board monitoring. Individual candidates with expertise related to changing board needs are significantly more likely to be selected for the post-merger board. In contrast, directors are appointed from outside of the well-defined labor pool when they possess more related expertise than candidates from the merging firms. Our evidence suggests that directors are selected to meet changing monitoring and advising needs.
To accurately gauge the flow of firms into and retained by stock exchanges, we add targets of public acquirers to the listing count. For the U.S., this...
This paper has a dual aim: it aims to contribute to the substance of comparative corporate law and it aims to advance the methodology of comparative legal...