Director networks and firm value

Tor-Erik Bakke, Jeffrey R. Black, Hamed Mahmudi and Scott Linn

Journal of Corporate Finance, 2024, vol. 85, issue C

Abstract: Are the professional networks of directors valuable? To separate the effect of director networks on firm value from the effect of other value-relevant director attributes, we use the unexpected deaths of directors as a shock to the director networks of interlocked directors. By studying the announcement returns and using a difference-in-differences methodology, we find the negative shock to director networks reduces the value of interlocked firms – a result that is stronger for firms that are more likely to benefit from access to information from board connections. This evidence is consistent with director networks being valuable and improving access to information.

Keywords: Board of directors; Network centrality; Quasi-natural experiment; Firm value (search for similar items in EconPapers)
JEL-codes: D85 G3 G32 L14 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:85:y:2024:i:c:s0929119924000075

DOI: 10.1016/j.jcorpfin.2024.102545

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