Presence of Professors in Boardroom: Impact on Canadian Firms

Abstract

<p>There is a plethora of arguments against and in support of having academic directors on the boards. Canadian firms are also having academic directors with the advisory and monitoring roles. In this study, we try to analyze the issue of academics on the boards by figuring out the relationship between firm performance and the presence of professors in Canadian firms. By applying time-series data of six years (2011-2016), this study reveals that academic directors have a significantly positive influence on the firm’s performance. While more academic directors on the board create a positive impact on the firm performance, academic directors serving on the audit committee contribute more to this value enhancement. Academic directors’ educational background or administrative involvement makes no difference rather represents counterintuitive results in explaining the positive relationship with firm performance. Subsequently, there is further need for investigation about the monitoring and advising role of the academic directors.</p>