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The legacy of wars around the world: Evidence from military directors

Abstract : This study estimates the effects of wars on countries and firms. We first show immediate negative effects of wars on economic and financial development as well as legal institutions. Using a cross-country sample of 93,697 firm-year observations, we further argue and show that (i) wars increase the supply of military directors in corporate boards; and(ii) military directors reduce firm performance as measured by Tobin’s Q and return on assets (ROA). We interpret these lingering effects as military directors possessing social capital but lacking business expertise. Our results are robust to a matched sample, a lagged difference model, a dynamic general method of moments model and to the control of country, industry and year fixed effects.
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https://hal.archives-ouvertes.fr/hal-02993121
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Submitted on : Friday, November 6, 2020 - 4:24:21 PM
Last modification on : Wednesday, November 3, 2021 - 6:50:16 AM

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Jiafu An, Tinghua Duan, Wenxuan Hou, Xianda Liu. The legacy of wars around the world: Evidence from military directors. Journal of International Financial Markets, Institutions and Money, Elsevier, 2020, 64, pp.101172. ⟨10.1016/j.intfin.2019.101172⟩. ⟨hal-02993121⟩

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