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Lindsay Baran and Rachel Wilson

Journal of Financial Research, 2018, vol. 41, issue 1, 113-147

Abstract: We examine whether board members serve as a channel for remotely located firms to access the benefits from business†dense areas due to economies of agglomeration. We find that geographically remote firms benefit from connections to firms in top metropolitan statistical areas (MSAs) for business density. After controlling for director compensation, we find connections to top MSA firms mitigate the negative effect of increased distance from business†dense areas. We address concerns of endogeneity by exploring a sample of firms whose directors gain board seats at top MSA firms and find a similar positive impact of connections to top MSA firms.

Date: 2018
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Journal of Financial Research is currently edited by Jayant Kale and Gerald Gay

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Handle: RePEc:bla:jfnres:v:41:y:2018:i:1:p:113-147