Are independent directors vases? Evidence based on social connectedness and firm performance in China

Jieli Xing and Xiong Xiong

Finance Research Letters, 2025, vol. 78, issue C

Abstract: Using data from China, we present empirical evidence for the causal influence of independent director connectedness through director network on firm performance. Specifically, we show that independent director connectedness is positively related to firm performance, thus rejecting the hypothesis that independent directors are vases. Further analyses show that the positive correlation only exits for firms that are non-state-owned enterprises and that have high shareholdings by institutional investors. Our results hold following a battery of robustness checks. The findings provide unique evidence to support the beneficial role of independent director connectedness in firm performance.

Keywords: Independent director; Social connectedness; Firm performance; Betweenness; Information (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:78:y:2025:i:c:s154461232500460x

DOI: 10.1016/j.frl.2025.107197

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