Boardroom Centrality and Firm Performance
By David F. Larcker, Eric C. So, C. Wang. 2013
619 citations recorded by the source corpus.
Firms with central boards of directors earn superior risk-adjusted stock returns. A long (short) position in the most (least) central firms earns average annual returns of 4.68%. Firms with central boards also experience higher future return-on-assets growth and more positive analyst forecast errors. Return prediction, return-on-assets growth, and analyst errors are concentrated among high growth opportunity firms or firms confronting adverse circumstances, consistent with boardroom connections mattering most for firms standing to benefit most from information and resources exchanged through boardroom networks. Overall, our results suggest that director networks provide economic benefits that are not immediately reflected in stock prices.
Subfields: Accounting
View Paper: https://www.semanticscholar.org/paper/e89d3798008e435873107d747b7ee626aa6a5719
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Accounting
- Shavin Malhotra
- T. Reus
- E. Roelofsen
- Angelica Gonzalez
- Jens Hagendorff
- Pengcheng Zhu
- Luc Renneboog
- Vathunyoo Sila
Citations in the corpus
- Underwriter Networks, Investor Attention, and Initial Public Offerings (2016, neutral): “For example, Larcker, So, and Wang (2013) investigate the connectedness of corporate board members across firms, and they show that firms with the best-connected boards earn on average substantially higher future excess returns compared with firms with the worst- 3 Several information driven models…”
- Independent Director Reputation Incentives and Stock Price Informativeness (2017, background): “More broadly, our paper also contributes to the literature that analyzes the effects of director networks and their effect on firm outcomes (Renneboog and Zhao, 2014; Larcker, So and Wang, 2013; Chiu, Teoh, and Tian, 2012).”
- The Acquisitive Nature of Extraverted CEOs (2017, background): “Such insights directly affect CEOs’ decision making and, as a result, the behavior and performance of their firms (Haunschild and Beckman, 1998; Westphal, 1999; Larcker, So, and Wang, 2013).”
- Do Better-Connected CEOs Innovate More? (2014, neutral): “In addition, Schonlau and Singh (2009) and Larcker, So, and Wang (2013) suggest that valuable information per-colates through the network of top corporate executives.”
- Female directors, board committees and firm performance (2018, neutral): “Larger firms tend to have better-connected boards, and as such the measure of female connectedness of the board is likely to be associated with larger firms (Larcker, So, and Wang, 2013).”
- Director Networks and Takeovers (2013, positive): “With the help of the network method based on graph theory, studies have documented a positive link between networks and firm performance (Geletkanycz and Boyd, 2011; Larcker, So and Wang, 2013).”