This paper investigates the impact of individual executives and directors on firm performance. In the German two-tier system of corporate governance the tasks of running and monitoring the firm can be clearly assigned to the members of the executive and the supervisory board. My study is based on a comprehensive panel data set of 889 German firms covering the period 1993-2011. I find that fixed effects of individual executives and directors are equally important in explaining firm performance and explain as much of the variation in firm performance as observable board, manager and firm characteristics. The results further indicate that transitions of former executives to the supervisory board are not a cause of concern for shareholders. Moreover, only the aggregate sum and not the dispersion of the executive and director fixed effects between or within the executive and supervisory boards has an impact on firm performance. Given the link between board characteristics and board actions, my results suggest that the inclusion of director fixed effects could be important for other topics in corporate finance as well.
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