Show simple item record

dc.contributor.author Lee, Changmin
dc.date.accessioned 2007-06-18T19:37:05Z
dc.date.available 2007-06-18T19:37:05Z
dc.date.issued 2007-05-22
dc.identifier.uri http://hdl.handle.net/2022/1817
dc.description This paper has been revised. The revised version is at http://hdl.handle.net/2022/1839
dc.description.abstract This paper develops a matching model in the director market with outside options to explain the equilibrium board quality. Based on Hermalin (2005) and Gabaix and Landier (2006), the board of directors has the function of monitoring and advising to affect the earning of firm assuming that the impact of a CEO's quality increases with the size of the firm under his control. This model shows that the big firms make board positions more attractive compared to outside options. Also, only when the impact of the advising by the board is strong, the more talented CEO can induce the high qualified outside directors. It follows that the board quality increases. Additionally, the model can explain the observed fact that the quality of directors on the same boards is dispersed. The estimations suggest that the talented ongoing CEOs and retired CEOs go to the firms which have the high market capitalization values and the large amount of sales. The evidence for the effect of the incumbent CEO's talent is mixed. I also find that the firms which have a large amount of sales pay more to outside directors. The compensation for directors, however, does not affect the quality of boards. en
dc.format.extent 824930 bytes
dc.format.mimetype application/pdf
dc.language.iso en_US en
dc.publisher Center for Applied Economics and Policy Research en
dc.relation.ispartofseries CAEPR Working Papers en
dc.relation.ispartofseries 2007-006 en
dc.relation.isversionof This paper can also be found on SSRN at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=988119 and RePEc: http://www.iub.edu/~caepr/RePEc/PDF/CAEPR2007-006.pdf. en
dc.subject CAEPR en
dc.subject Center for Applied Economics and Policy Research en
dc.subject Corporate governance en
dc.title Where do the talented people work as outside directors? en
dc.type Working Paper en


Files in this item

This item appears in the following Collection(s)

Show simple item record

Search IUScholarWorks


Advanced Search

Browse

My Account

Statistics