Board Composition and Corporate Financing: The Impact of Financial Institution Representation on Borrowing

Abstract

This study examined the extent to which the presence of representatives of financial institutions on firms' boards of directors affected borrowing decisions. Through a time-series analysis of 22 large U.S. manufacturing firms from 1956 through 1983, we found that the types of Financial institutions represented on firms' boards were associated with the amounts and types of financing the firms obtained.