Determinants of board members' financial expertise — Empirical evidence from France |
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Authors: | Thomas Jeanjean Hervé Stolowy |
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Institution: | HEC Paris, France |
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Abstract: | Very few countries require directors to be financially literate. This article investigates the determinants of boards' financial expertise using a sample of 95 nonfinancial French listed firms. We construct a measure of financial expertise based on educational and career background data for 943 individuals occupying 1140 posts in our sample and explore the determinants of average per-firm financial expertise using a Tobit analysis. We find that average financial expertise is negatively associated with board type (two-tier versus one-tier) and growth opportunities and positively associated with board independence, ownership concentration, and institutional ownership. These findings are robust to sensitivity analyses. |
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Keywords: | Financial expertise Board of directors Supervisory board Corporate governance |
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