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Human and Social Capital in the Labor Market for Directors

Advances in Financial Economics

ISBN: 978-1-78350-120-5

Publication date: 9 December 2013



This study examines the director labor market to better understand which director attributes are important for board service.


Director level data, which includes proxies for both human and social capital, is analyzed to determine which characteristics increase the likelihood of gaining additional board appointments.


We find that general skills and director connections are valued in the marketplace. Among specific director characteristics, financial expertise, holding an MBA degree, and S&P 500 experience are positively associated with gaining new board appointments. Moreover, regardless of the director’s level of expertise, highly connected individuals are more likely to obtain new appointments. Finally, from a range of characteristics, only director connections mitigate the negative consequences of serving on the boards of firms that restate their financials.


While most research has analyzed the effectiveness of boards of directors as a whole, this study examines the value of individual director characteristics within the context of the labor market.




We would like to thank Glenn Boyle, Jack Cooney, Joseph Fan, Cesare Fracassi, Fabrizio Ferri, Bill Megginson, Lalitha Naveen, Kasper Nielsen, Bang Dang Nguyen, David Reeb, Laura Starks, Mike Stegemoller, Pradeep Yadav, Albert Wang, and seminar participants at the Chinese University of Hong Kong, the Lonestar Finance Conference, Texas Tech University, Temple University, University of Canterbury, University of Georgia, University of Oklahoma, and University of Texas at Austin for helpful comments.


Cashman, G.D., Gillan, S.L. and Whitby, R.J. (2013), "Human and Social Capital in the Labor Market for Directors", Advances in Financial Economics (Advances in Financial Economics, Vol. 16), Emerald Group Publishing Limited, Leeds, pp. 137-166.



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