Abstract: In this study, we offer a theoretical and empirical analysis of how and why outside directors, by virtue of their accumulated strategic expertise, can shape firm strategy. We develop a theory of director expertise as a latent resource, specifying the conditions under which such expertise is more likely to be activated, and thus more influential in driving strategic change. We also offer an original multifaceted conceptualization and measurement of director experience, which we term a director’s strategic profile. We find supportive evidence for our perspective, based on an extensive longitudinal dataset that captures the formation and evolution of boards for firms experiencing IPOs, beginning in 1997 and ending in 2011.

Abstract: This paper investigates how the Legitimacy and Credibility of Board members may enhance the likelihood of making successful strategic decisions, such as acquisitions. We argue that Boards with legitimate and credible directors are more likely to perform efficiently their strategy and advice roles than boards relying on a majority of outside independent directors. Our preliminary findings support the general hypothesis that for discrete events of singular importance, such as acquisitions, a legitimate and credible board will enhance the likelihood of a successful transaction. We test our hypotheses in the context of corporate acquisitions with a sample of 133 Canadian transactions carried out between the years 2000 and 2006.

Abstract: Research on the director labor market has primarily focused on internal factors driving director exit, such as firm performance or director characteristics, but has mostly overlooked how external factors may influence director exit and other labor market outcomes. We argue that external attention, in the form of analyst recommendations and earnings surprises, leads to various labor market outcomes for directors based on the nature of that attention. Negative attention should decrease directors’ willingness to serve and may threaten prestige, leading to director exit. Positive attention should increase directors’ willingness to serve and should enhance prestige, decreasing exit and leading to other positive outcomes. Further, we argue that these effects will be intensified by analyst reputation and directors’ level of involvement on board committees.

Abstract: An implicit assumption in prior work on corporate boards is that board service results from a rational consideration of whether the benefits outweigh the costs for both the firm and the individual director. We suggest, however, that there is value in analyzing more deeply the multiple components and boundedly rational character of any such cost/benefit calculation. Board service is a complex, time-variant, and two-sided process that we believe lends itself well to a behavioral governance approach. We focus on why certain resources emerge as exchange elements, how the initial and later valuation of these resources may differ, how the uncertain timing of the resource exchange can affect the relationship, and how unintended consequences for both sides of the dyad can emerge from these behavioral elements.