The labor market for directors and externalities in corporate governance: Evidence from the international labor market

Ugur Lel and Darius Miller

Journal of Accounting and Economics, 2019, vol. 68, issue 1

Abstract: We find that the directorial labor market's ability to align the incentives of managers and shareholders depends on investor protection in a country. For example, following a shareholder unfriendly signal in common law countries, directors lose 2.64 times more outside board seats and are 57% more likely to be turned over at their own firm than in civil law countries. Further, outside director appointments are value relevant only strong investor protection countries. Our findings suggest that the labor market as a mechanism to improve corporate governance is least effective in the countries where it is needed the most.

Keywords: Labor market for directors; Investor protection; Ex-post settling hypothesis; Director reputation (search for similar items in EconPapers)
JEL-codes: F30 G15 G34 K22 M16 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:68:y:2019:i:1:s016541011830123x

DOI: 10.1016/j.jacceco.2018.12.001

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