Journal Article

Are prestigious directors mere attractive ornaments on the corporate Christmas tree?

Abstract

Using the United Kingdom’s unique institutional setting of Queen’s [now King’s] honours, we examine the influence of director prestige on both short-term and long-term firm performance. We find that the market reacts positively to the appointments of Prestigious Award-Winning Directors (PAWDs). Firms appointing PAWDs also show significantly improved long-term performance, and this performance change is higher when firms appoint PAWDs according to their needs. The evidence suggests that PAWDs make important contributions to the firm by providing effective monitoring, facilitating preferential access to resources and offering legitimacy. We conclude that director prestige not only signals higher human and social capital but also incentivizes effective monitoring of managerial decisions.

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Authors

Khedar, Harsh
Agarwal, Vineet
Poshakwale, Sunil

Oxford Brookes departments

Oxford Brookes Business School

Dates

Year of publication: 2024
Date of RADAR deposit: 2024-09-04

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This work is licensed under a Creative Commons Attribution 4.0 International License

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