Is prior director experience valuable?
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
Related Research Unit(s)
|Journal / Publication||Accounting and Finance|
|Publication status||Published - Sep 2013|
|Link to Scopus||https://www.scopus.com/record/display.uri?eid=2-s2.0-84883050677&origin=recordpage|
Previous studies have investigated the effectiveness of directors in performing their monitoring and advising functions by examining characteristics such as independence, qualifications and professional expertise. In this study, we propose a more direct measure of director effectiveness - prior experience as a director. Using hand-collected data from Australia, we find that both the depth (number of prior years) and breadth (number of current directorships) of a new appointee's director experience is valued by shareholders at appointment. In particular, the market reaction is highest for appointees with the most prior director experience (two or more other current directorships in listed companies and four or more years of director experience) and when experienced appointees join less-experienced boards. © 2012 The Authors.
- Board of directors, Director appointments, Director experience