Seminarios académicos y conferencias
Director Networks and Firm Value
25 mayo 2017 - 17 hrs.
Sala de postgrado, Facultad de Ciencias Económicas y Administrativas UC
Abstract: Are the professional networks of corporate directors valuable? More connected directors may have better information and more influence, which can increase firm value. However, directors with larger networks may also spread misleading or value-decreasing management practices. To identify the effect of director networks on firm value, we use the sudden deaths of well- connected directors as a shock to the director networks of interlocked directors. By looking at the announcement returns and using a difference-in-differences methodology, we find that this negative shock to director networks reduces firm value. This evidence suggests that director networks are valuable.