From boots to suits: do military directors protect shareholders’ wealth?

Tasawar Nawaz, Roszaini Haniffa, Mohammad Hudaib

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)


This paper explores the influence of military directors in protecting shareholders’ wealth through CEO compensation and corporate dividend payout policies. Based on manually collected data on corporate boards of non-financial companies operating in Pakistan, the results indicate a significant negative association between the presence of military directors on corporate boards and CEO compensation, thus supporting the notion that such directors are effective in monitoring and curtailing excessive rent seeking behaviour by the agents. In other words, presence of military directors on Pakistani corporate boards reduces agency costs and in turn enhances shareholders’ wealth. Results also indicate significant positive relationship between presence of military directors on boards and dividend payout, hence signifying that such directors are effective in enhancing shareholders’ wealth by reducing free cash flow opportunities that would otherwise be deployed by agents for their private benefits. We further found military directors with business education and wider networks to have significant positive association with dividend payout but not the case with CEO compensation. We control for board attributes, agent heterogeneity and firm-specific attributes in all our models. Overall, the benefits of military directors’ inclusion on corporate boards in Pakistan have far broader strategic, economic and policy implications on the nation besides resolving the principal-agent problems in the boardroom.
Original languageEnglish
Pages (from-to)1479-1511
Number of pages33
JournalReview of Quantitative Finance and Accounting
Issue number4
Early online date12 Sep 2023
Publication statusPublished - 1 Nov 2023

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