Why are individual directors selected?

Corporate spinoffs present a unique opportunity to analyze the choice of directors from among a pool of potential candidates. We find that both post-spinoff unit and remaining parent firms are more likely to select pre-spinoff parent directors who: i) have relevant industry expertise; ii) have pre-spinoff parent board ties to the post-spinoff CEO; or iii) are younger. Unit firms are also more likely to select pre-spinoff directors who were associated with better firm performance prior to the spinoff. We conclude that industry expertise, ties to the CEO, age, and track record are potential reasons why individual directors are selected.