Does Board Overlap Promote Coordination Between Firms?

Heng Geng, Harald Hau, Roni Michaely and Binh Nguyen
Additional contact information
Heng Geng: Victoria University of Wellington
Binh Nguyen: Victoria University of Wellington - Victoria University of Wellington, Students

No 21-79, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We investigate how board overlap affects coordination and performance among public firms. Our identification exploits the staggered introduction of Corporate OpportunityWaivers (COWs) in nine U.S. states since 2000. By reducing legal risk to directors serving on multiple boards, the COW legislation increased intra-industry board overlap for those firms that benefit most from the information flow facilitated by board overlap. We find that more board overlap improves firm profitability but also reduces investment, product overlap, and innovation. Our findings support the notion that board overlap curtails firm rivalry.

Keywords: Board overlap; corporate opportunity waivers; firm coordination; market power (search for similar items in EconPapers)
JEL-codes: G30 G38 K21 K22 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2021-11
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-com, nep-hrm, nep-law and nep-reg
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2179

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