Industry Expert Directors

Item Type Conference or Workshop Item (Paper)
Abstract We analyze the valuation effect of board industry experience and channels through which industry experience of outside directors affects firm value. Our analysis shows that firms with more experienced outside directors are valued at a premium compared to firms with less experienced outside directors. Additional analyses, including a quasi-experimental setting based on director deaths, mitigate endogeneity concerns. Further tests show that the board industry experience-firm value relation is more pronounced for firms with larger investment programs, larger cash reserves, and during crises. In contrast, it is weaker in more dynamic industries where the value of previously acquired experience is likely to be diminished. We also provide some evidence that corporate governance problems in firms, in particular entrenched CEOs, and a limited supply of industry experts prevent firms from appointing more industry experts to their boards, even though this would be value-increasing. Overall, our findings are consistent with board industry experience being a valuable corporate governance mechanism.
Authors Drobetz, Wolfgang; von Meyerinck, Felix; Oesch, David & Schmid, Markus
Language English
Subjects business studies
HSG Classification contribution to scientific community
Refereed No
Date 16 December 2015
Event Title 28th Australasian Finance and Banking Conference (AFBC)
Event Location Sydney
Event Dates 16.-18.12.2015
Publisher DOI
Depositing User Prof. Dr. Felix von Meyerinck
Date Deposited 13 Jan 2016 10:36
Last Modified 20 Mar 2023 01:24


Full text not available from this repository.


Drobetz, Wolfgang; von Meyerinck, Felix; Oesch, David & Schmid, Markus: Industry Expert Directors. 2015. - 28th Australasian Finance and Banking Conference (AFBC). - Sydney.

Edit item Edit item