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

Jiafu An, Tinghua Duan, Wenxuan Hou, Xianda Liu

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    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.
    Original languageEnglish
    Article number101172
    JournalJournal of International Financial Markets, Institutions and Money
    Publication statusPublished - 7 Jan 2020


    • War
    • Military directors
    • Board directors
    • Firm performance


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