Abstract

http://ssrn.com/abstract=1691241
 
 

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Director Networks, Firm Performance, and Shareholder Base


Dominik Böhler


Karlsruhe Institute of Technology

Marc Steffen Rapp


University of Marburg - School of Business & Economics

Michael Wolff


University of Göttingen

October 10, 2010


Abstract:     
Although often criticized for their inefficiency, director networks are observed in many economies of the world. This raises two questions: What is the empirical effect of director networks on firm performance and what are the determinants of director networks? We empirically examine both issues drawing on a unique dataset covering German firms from 1999 to 2007. We find that network embeddedness negatively affects firm performance. Moreover, while foreign investors actively disentangle the network, German institutional investors foster it. Our findings are consistent with the social class hypothesis arguing that well-connected directors feel more committed to their network than to the firms in which they sit on the board. Our findings have important implications for corporate governance research and the regulation of capital markets.

Number of Pages in PDF File: 37

Keywords: director networks, investor base, corporate governance, inter-organizational relationships

JEL Classification: G34, G15, F40, M16

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Date posted: October 12, 2010  

Suggested Citation

Böhler, Dominik and Rapp, Marc Steffen and Wolff, Michael, Director Networks, Firm Performance, and Shareholder Base (October 10, 2010). Available at SSRN: http://ssrn.com/abstract=1691241 or http://dx.doi.org/10.2139/ssrn.1691241

Contact Information

Dominik Böhler
Karlsruhe Institute of Technology ( email )
Kaiserstraße 12
Karlsruhe, Baden Württemberg 76131
Germany
Marc Steffen Rapp (Contact Author)
University of Marburg - School of Business & Economics ( email )
Am Plan 2
Marburg, D-35037
Germany
Michael Wolff
University of Göttingen ( email )
Platz der Göttinger Sieben 3
Göttingen, DE 37073
Germany
HOME PAGE: http://www.contolling.uni-goettingen.de
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