Fast tracks to boardrooms: Director supply and board appointments

Audinga Baltrunaite and Egle Karmaziene

Journal of Corporate Finance, 2024, vol. 88, issue C

Abstract: We examine how the size of the labor market for corporate directors impacts board appointments in Italian private firms. Using the high-speed railway expansion as an exogenous shock to costs of serving on boards, we find that an increase in the supply of non-local directors leads to a higher degree of positive assortative matching between firms and directors. High-quality firms improve their board quality at the expense of low-quality firms. The director–firm matching effects are muted among companies with owners acting as board directors. This finding highlights the importance of director entrenchment in the corporate governance of private firms.

Keywords: Director supply; Board of directors; Match quality; Director entrenchment (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:88:y:2024:i:c:s0929119924001044

DOI: 10.1016/j.jcorpfin.2024.102642

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