Roles of academic directors on US Fortune 500 boards

Abstract

Purpose

This paper aims to examine the prevalence of directors of US Fortune 500 firms who come from an academic background, and possible unique reasons for their appointment.

Design/methodology/approach

Based on extant theory of the resource‐dependence roles of non‐management directors, this study proposes and tests three hypotheses concerning distinctive reasons firms may appoint an academic to their boards. Academic directors may serve unique roles in increasing board demographic diversity, increasing firm intellectual capital, and providing links to local geographic constituents. Using year 2002 data from the US Fortune 500 firms, this study presents descriptive statistics and uses t‐tests and χ² tests to examine hypotheses.

Findings

Firms having academics on their boards have greater board demographic diversity than firms without an academic director. Firms with academic directors have the same average emphasis on knowledge‐based earnings as other firms. Academics associated with US top‐ranked universities tend to be more likely to hold board seats. Firms tend to select academic directors from the geographic regions where the firm is headquartered and have a slight tendency to use them on public affairs committees.

Research limitations/implications

This study's findings highlight a unique non‐monitoring advantage of academic directors for firms seeking increased board diversity, and potential community/stakeholder liaisons.

Practical implications

Firms wishing to increase board diversity or improve relationships with other stakeholder groups may find academic directors useful to such efforts. Academic directors appear to be just as capable as other outside directors in developing firm intellectual capital.

Originality/value

This paper extends the present literature in resource dependence by examining academic directors, a new director subset. The paper is also unique in that it uses data collected from proxy statements, rather than survey data.

Citation

Peterson, C.A. and Philpot, J. (2009), "Roles of academic directors on US Fortune 500 boards", Corporate Governance, Vol. 9 No. 2, pp. 202-215. https://doi.org/10.1108/14720700910946631