Abstract
• We examine the effect of independent directors with military experience on firm performance. • We show firms with military independent directors tend to have poor firm performance. • Military experience of independent directors is associated with conservative investment. • We find firms with military independent directors invest less in R&D. Characteristics and experiences of directors can affect firm performance. In this study, we examine the relationship between independent director military service and Tobin's Q. The impact of a director's military experience on firm value is increasingly important as corporations target military veterans for board seats. We find firms with independent directors with military experience tend to have poor firm performance. We explore R&D as a possible channel for the reduction in firm value and find firms with military independent directors also invest less in R&D. Overall, our findings suggest that past military service of directors does not improve firm performance.
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