Talent and Ownership on Corporate Boards

This research, with co-author Emilie Feldman,  examines the performance of firms whose boards include directors with sizeable ownership stakes and relatively low levels of business experience. In contrast to theories that predict a strong positive correlation between share ownership and firm performance, this research shows that that relationship is moderated by talent:  directors with high levels of ownership coupled with low levels of talent are associated with low, not high, levels of firm performance.  These results raise a number of concerns about the composition of corporate boards and the opportunity costs of directors who are highly motivated but lack the talent to deliver.