The Value Effects of Digital Expertise on Corporate Boards

Abstract

We examine the impact of board level digital expertise on firm performance for a sample of FTSE 350 firms over the period 2013 to 2018. We find that the presence of digital experts on the boards is significantly and positively related to firm performance. We conduct several additional tests to establish the robustness of the causal relation between digital experts on board and firm performance. Using propensity score matching (PSM) analysis, we document that firms which have digital experts on board have a significant increase in their firm performance relative to a matched sample of firms without digital experts on board. Our findings underscore the significance of digital experts on board in improving firm growth, liquidity and reducing business risk, thereby enabling such firms to increase performance. Additional tests show that the presence of digital experts on board has a strong influence on information asymmetry and corporate governance mechanisms.