The Importance of Network Recommendations in the Director Labor Market
51 Pages Posted: 21 Mar 2018 Last revised: 1 Nov 2018
Date Written: March 20, 2018
Directors are more likely to obtain additional directorships or be promoted if the CEO and peer directors of their current board are well-connected. The impact of CEO and peer director connections is stronger for additional appointments and promotions at firms in the CEO’s and peer directors’ networks. CEO connections are particularly important for directors with a weaker labor market. There is no evidence that the appointments of referred directors are less well-received by the market than other appointments. Overall, connections are important in the director labor market. Access to additional networks provides strong incentives for directors to join corporate boards.
Keywords: board of directors, social connections, director labor market
JEL Classification: G30, G34
Suggested Citation: Suggested Citation