Board quality and the public purse: A study of government subsidies and corporate governance

We develop a new measure of director quality by conducting a meta‐analysis of the leadership literature and extracting the common characteristics of experience, creativity, social capital, talent, and education. From these five characteristics we create an integrated leadership model of director quality and examine its relation to a firm's success in securing government subsidies. We find that firms with higher‐quality boards secure larger subsidy amounts and receive subsidies more consistently. We establish causality using instrumental variables and a difference‐in‐differences design exploiting the staggered adoption of Corporate Opportunities Waiver laws.