What Attracts Directors to Boards of Small-and Mid-Sized Companies
AbstractThis paper explores the reasons why outside corporate directors choose to serve on the boards of small- to mid-sized companies. Resource dependence theory explains the importance of outside directors on corporate boards, especially for small- and mid-sized companies. Attracting qualified board members is both an important and sometimes difficult task for such companies. Using a sample of 102 NASDAQ companies, we find that firm performance, financial incentives, and time constraints influence the decision of an outsider to accept a board seat.
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