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

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Original languageEnglish
Number of pages26
JournalJournal of International Financial Markets, Institutions & Money
Early online date7 Jan 2020
Publication statusE-pub ahead of print - 7 Jan 2020


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 global sample of 93,697 firm-year observation, 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 indicated by Tobin’s Q and ROA. We interpret these lingering effects as military directors possess social capital but lack business expertise. Our results are robust to a matched sample, a lagged difference model, a two-step dynamic GMM model and to the control of country, industry and year fixed effects.

    Research areas

  • war, military directors, board directors, firm performance

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