EVIDENCE ON THE MARKET FOR PROFESSIONAL DIRECTORS

Using the temporary increase in the supply of directors associated with successful tender offers, we examine characteristics of directors who are valuable in the market for board seats. We find that after a takeover, professional directors are three times more likely to receive new appointments than other types of directors released from their respective boards. We find that the proportion of professional directors in above-average performing targets is significantly greater than that in underperforming targets. Our results indicate that professional directors generally have valuable general human capital that more than offsets the costs of multiple directorships. 2005 The Southern Finance Association and the Southwestern Finance Association.