Military Experience and Subsequent Effectiveness as a Director

Military training promotes leadership skills and emphasizes a unique value system encompassing integrity, duty, selflessness and self-discipline. We hypothesize that directors with military experience encourage timely disclosure of firm-specific information, which leads to higher stock-price informativeness. Based on a sample of listed firms in 56 countries over the period 1999-2016, we document that having a military director on board is positively related to stock price non-synchronicity, informed trading and shorter price response delay. Exploiting exogenous variations in the likelihood of having military directors that arise as a result of variations in the military talent pool we confirm the causal inference of these results. Taken together, the findings suggest that directors with experience of military service shape the organizational ethical climate and influences the monitoring function of the boards on which they serve. Wars and economic sanctions have an unremittingly negative connotation. They do however, invariable enhance military institutions and increase the number of people with military experience. This paper demonstrates that the experience and training gained during time in the military can result in an improved talent pool – in this case, directors of firms. Policy makers would be wise not to overlook this, perhaps unexpected, feature in a post-conflict economy