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Do Military Independent Directors Improve Firm Performance?

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  • Li, Zhe
  • Rainville, Megan

Abstract

Characteristics and experiences of directors can affect firm performance. In this study, we examine the relationship between independent director military service and Tobin's Q. The impact of a director's military experience on firm value is increasingly important as corporations target military veterans for board seats. We find firms with independent directors with military experience tend to have poor firm performance. We explore R&D as a possible channel for the reduction in firm value and find firms with military independent directors also invest less in R&D. Overall, our findings suggest that past military service of directors does not improve firm performance.

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  • Li, Zhe & Rainville, Megan, 2021. "Do Military Independent Directors Improve Firm Performance?," Finance Research Letters, Elsevier, vol. 43(C).
    • Handle: RePEc:eee:finlet:v:43:y:2021:i:c:s1544612321000696
    DOI: 10.1016/j.frl.2021.101988
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    Cited by:

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    2. Chen, Jiamin & Fan, Yaoyao & Zhang, Xuezhi, 2022. "Rookie independent directors and corporate fraud in China," Finance Research Letters, Elsevier, vol. 46(PB).
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    More about this item

    Keywords

    Military executives; Investment; R&D; Corporate governance; Firm Performance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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