Sharing a Director with a Peer
Series
School of Finance Working Paper Series
Type
working paper
Date Issued
2015
Author(s)
Abstract
Exploiting a unique feature of the Clayton Antitrust Act, we analyze how directors holding outside directorships at peer firms affect firm value and performance of financial firms. We find that directors serving simultaneously at horizontally-related firms have a negative impact on firm value and performance, whereas directors holding outside directorships in vertical industries, i.e., customer or supplier industries, enhance firm value and performance. Our results suggest a tradeoff between director experience and conflicts of interest. Further, stock market reactions provide evidence that investors recognize the value-diminishing effect of horizontal directors as well as the value-increasing effect of vertical directors.
Language
English
Keywords
Governance
Firm value
Financial institutions
HSG Classification
contribution to scientific community
Refereed
No
Number
2015/07
Subject(s)
Division(s)
Eprints ID
240874