Board tenure and firm performance

We view director tenure as an indicator of a firm's stability. Longer board indicates that shareholders are satisfied with their appointments, the has relevant mix capital, it is effective at monitoring and advising management, firm unlikely to face operational strategic problems require drastic changes its board. Using broad sample up 3800 firms over 20-year period, we show longer have higher future abnormal returns. Our evidence suggests investors misprice tenure: associated market valuations but not expected returns measured by analysts' target prices.