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The Unbalanced Matching in a Director Market

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Author Info
Changmin Lee () (Indiana University Bloomington)

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Abstract

I construct an intertemporal searching model ("take it or leave it offer") in a frictional directorship market to explain the unbalanced matching between the director and the firm. In this model, potential candidates for outside directors and firms have heterogeneous (also, well ordered) quality levels. Also, both parties have strictly ordered preferences over the quality of counterpart from high levels to low levels. A candidate considers his quality ranking to compare the value of accepting a favorite offer at present to the value of waiting for successful matching with a better offer in the future. My model suggests that that highly qualified candidates would be likely to be matched with bad (not too bad) firms. The best candidate could go to the 150th ranked firm over 250 firms under the uniform distribution for the quality of the firm, and the 140th ranked firm under the extreme value distribution.

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File URL: http://www.iub.edu/~caepr/RePEc/PDF/2007/CAEPR2007-012.pdf
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Publisher Info
Paper provided by Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington in its series Caepr Working Papers with number 2007-012.

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Length: 26 pages
Date of creation: Jul 2007
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Handle: RePEc:inu:caeprp:2007012

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Related research
Keywords: Corporate Governance Board of Directors Matching Model Job Search

Find related papers by JEL classification:
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Xavier Gabaix & Augustin Landier, 2006. "Why Has CEO Pay Increased So Much?," 2006 Meeting Papers 518, Society for Economic Dynamics. [Downloadable!]
    Other versions:
  2. McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February. [Downloadable!] (restricted)
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This page was last updated on 2008-9-19.

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