Aida Sijamic Wahid is Assistant Professor of Accounting at University of Toronto Rotman School of Management; Kyle T. Welch is Assistant Professor of Accountancy at George Washington University School of Business. This post is based on a recent paper authored by Professor Wahid and Professor Welch.
Professional directors, as often defined by academics and practitioners, are independent directors whose only vocation consists of serving as corporate directors on one or more boards. Such directors hold no other full-time employment. Currently, over 84 percent of corporate boards include at least one professional director. Since the 1970’s academics across disciplines have argued that professional directors enhancing corporate governance (e.g. Eisenburg 1975, Barr 1976, Gilson and Kraakman 1991, Fram 2005, Pozen 2010). Many argue that specialized labor on boards will lead to higher quality and more rigorous governance as more dedicated directors have fewer competing commitments (e.g. Fram 2005, Pozen 2010, Bainbridge and Henderson 2013). These arguments seemed to have gained currency in practice as the portion of boards composed of professional directors has increased over the last decade. In addition, a survey conducted in 2004 found that around 67 percent of directors asked were in favor of appointing professional directors to improve board quality (Felton 2004).
