Appointments of Academic Directors

Joshua T. White, Tracie Woidtke, Harold A. Black and Robert L. Schweitzer

Abstract:

We examine the outside director selection process using unique data on appointments of academic directors. Overall, we find academic directors tend to be appointed by small- and mid-cap firms expanding their boards. However, we find important differences in both the factors influencing academic appointments and the market's reaction when allowing for heterogeneity. Academics in science, medicine and engineering appear to be appointed for their expertise, and the market reacts favorably. Academic administrators appear to be appointed for their networks, and the market reacts favorably when the administrator is affiliated with a business school but negatively when the administrator is not within close geographic proximity. Business and law professors appear to be appointed for general expertise and prestige, but we find little evidence of any significant market reaction.