Politicians on the board of directors: Do connections affect the bottom line?

Research output: Contribution to journalArticle

337 Scopus citations

Abstract

Resource dependence theory emphasizes the importance of linking firms with external contingencies that create uncertainty and interdependence. A critical source of external interdependency and uncertainty for business is government. One way to link a firm to the government is appointing ex-politicians to the board of directors. This study compares the boards of two groups of firms - those from heavily and less regulated industries - and finds the former group has more politician directors. Firms with politicians on the board are associated with better market-based performance across both groups, although the relationship is more pronounced within heavily regulated industries.

Original languageEnglish (US)
Pages (from-to)464-481
Number of pages18
JournalJournal of Management
Volume31
Issue number3
DOIs
StatePublished - Jun 1 2005

Keywords

  • Board composition
  • Boards of directors
  • Politicians

ASJC Scopus subject areas

  • Finance
  • Strategy and Management

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