Abstract

http://ssrn.com/abstract=1651407
 
 

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Boardroom Centrality and Firm Performance


David F. Larcker


Stanford University - Graduate School of Business

Eric C. So


Massachusetts Institute of Technology (MIT) - Sloan School of Management

Charles C. Y. Wang


Harvard Business School

January 13, 2013

Journal of Accounting & Economics (JAE), 55(2-3): 225-250 (April-May 2013)
Rock Center for Corporate Governance at Stanford University Working Paper No. 84

Abstract:     
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.

Keywords: board of director networks, analyst forecasts, market efficiency

JEL Classification: G3, G14, L14

Accepted Paper Series


Not Available For Download

Date posted: July 31, 2010 ; Last revised: June 7, 2013

Suggested Citation

Larcker, David F. and So, Eric C. and Wang, Charles C. Y., Boardroom Centrality and Firm Performance (January 13, 2013). Journal of Accounting & Economics (JAE), 55(2-3): 225-250 (April-May 2013); Rock Center for Corporate Governance at Stanford University Working Paper No. 84. Available at SSRN: http://ssrn.com/abstract=1651407 or http://dx.doi.org/10.2139/ssrn.1651407

Contact Information

David F. Larcker (Contact Author)
Stanford University - Graduate School of Business ( email )
Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

Eric C. So
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
77 Massachusetts Ave.
E62-416
Cambridge, MA 02142
United States
Charles C. Y. Wang
Harvard Business School ( email )
Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
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