Discussion paper

DP15828 Fast Tracks to Boardrooms: Director Supply and Board Appointments

We examine how the size of the labor market for corporate directors impacts board appointments in Italian private firms. Using the high-speed railway expansion as an exogenous shock to costs of serving on boards, we find that an increase in the supply of non-local directors leads to a higher degree of positive assortative matching between firms and directors. High-quality firms improve their board quality at the expense of low-quality firms. The director-firm matching effects are muted among companies with owners acting as board directors. This finding highlights the importance of director entrenchment in the corporate governance of private firms.


Baltrunaite, A and E Karmaziene (2021), ‘DP15828 Fast Tracks to Boardrooms: Director Supply and Board Appointments‘, CEPR Discussion Paper No. 15828. CEPR Press, Paris & London. https://cepr.org/publications/dp15828