Do Individual Directors Matter? Evidence of Director-Specific Quality

Do Individual Directors Matter? Evidence of Director-Specific Quality

Dipesh Bhattarai, Matthew Serfling, Tracie Woidtke

Series number :

Serial Number: 

Date posted :

January 20 2023

Last revised :

January 20 2023
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  • board of directors • 
  • Director Quality • 
  • firm value

We create a new measure called director-specific quality (DSQ) that captures the collection of value-relevant transferable attributes unique to a director and explains 10% of the variation in firm value. Directors with higher DSQ receive greater voter support, and investors respond more (less) favorably when they are appointed (die).

Boards with higher DSQ make more value-increasing M&A deals, tie CEO compensation more closely to performance, produce more and higher quality innovation, and manage cash better. Difference-in-differences analyses exploiting director deaths confirm these effects. During the COVID-19 pandemic, firms with higher board-level DSQ also experienced relatively higher stock returns. Overall, our results suggest that directors have unique value-relevant attributes, and who firms hire matters.


Real name:
Dipesh Bhattarai
Real name:
Tracie Woidtke
The University of Tennessee