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Review of Quantitative Finance and Accounting

, Volume 46, Issue 1, pp 25–45 | Cite as

Performance effects of appointing other firms’ executive directors to corporate boards: an analysis of UK firms

  • Alexander Muravyev
  • Oleksandr Talavera
  • Charlie Weir
Original Research

Abstract

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.

Keywords

Executive directors Non-executive directors Company performance 

JEL Classifications

G34 G39 

Notes

Acknowledgments

We would like to thank an anonymous referee for helpful comments. Financial support for the project from the British Academy is gratefully acknowledged. Grant No. R18271.

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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  • Alexander Muravyev
    • 1
    • 2
  • Oleksandr Talavera
    • 3
  • Charlie Weir
    • 4
  1. 1.St. Petersburg University GSOMSt. PetersburgRussia
  2. 2.Institute for the Study of Labor (IZA)BonnGermany
  3. 3.University of Sheffield Management SchoolSheffieldUK
  4. 4.Aberdeen Business SchoolRobert Gordon UniversityAberdeenUK

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