Two Essays on Corporate Boards

Considerable research examines how board characteristics impact firm performance (e.g., Tobin’s Q). Besides board size and board independence, recent work has introduced numerous new board characteristics to the literature. These include, for example, the number of external directorships held by directors, the presence of interlocked directors, the connectedness of the board, and the presence of foreign directors, female directors, and older directors amongst others. However, few studies have examined a comprehensive set of these characteristics. As such we do not know how these different characteristics relate to each other and which are important in explaining firm performance. This paper examines a comprehensive set of board characteristics, documenting how the characteristics relate to each other and using bootstrap analysis and extreme bounds analysis (EBA) to examine how these characteristics are associated with firm value as measured by Tobin’s Q. In doing so, I shed light on which board characteristics really matter. In addition, I use principal components analysis to examine what factors characterize the dimensionality of board structure. Based on the results in this study, I claim that board size, age, family directors, foreign directors, and insider with outside directorships should be considered in the study of corporate boards.