The high-profile scandals of the late 1990s have transformed the corporate governance landscape and increased the oversight duties of independent directors. New mandates, such as the Sarbanes-Oxley Act of 2002, have had substantial effects on corporate boards. For one thing, they dramatically...

Recent surveys indicate that industry expertise is the most sought-after director qualification. Yet evidence on the value of such expertise is limited. This paper shows that firms that are difficult for non-experts to monitor and advise are more likely to appoint industry expert directors. Such...