Performance effects of appointing other firms' executive directors to corporate boards: an analysis of UK firms.
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MURAVYEV, A., TALAVERA, O. and WEIR, C. 2016. Performance effects of appointing other firms' executive directors to corporate boards: an analysis of UK firms. Review of quantitative finance and accounting [online], 46(1), pages 25-45. Available from: https://dx.doi.org/10.1007/s11156-014-0460-6
This paper studies the effect on company performance of appointing non-executive directors that are also executive directors in other firms. The analysis is based on a new panel dataset of UK companies over 2002-2008. Our findings suggest a positive relation between the presence of these non-executive directors and the accounting performance of the appointing companies. The effect is stronger if these directors are executive directors in firms that are performing well. We also find a positive effect when these non-executive directors are members of the audit committee. Overall, our results are broadly consistent with the view that non-executive directors that are executives in other firms contribute to both the monitoring and advisory functions of corporate boards.