The Importance of Network Recommendations in the Director Labor Market

51 Pages Posted: 21 Mar 2018 Last revised: 1 Nov 2018

See all articles by Rüdiger Fahlenbrach

Rüdiger Fahlenbrach

Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute

Hyemin Kim

Nanyang Technological University - Division of Banking & Finance

Angie Low

Nanyang Technological University - Division of Banking & Finance

Date Written: March 20, 2018

Abstract

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

Fahlenbrach, Rüdiger and Kim, Hyemin and Low, Angie, The Importance of Network Recommendations in the Director Labor Market (March 20, 2018). Swiss Finance Institute Research Paper No. 18-28; 31st Australasian Finance and Banking Conference 2018. Available at SSRN: https://ssrn.com/abstract=3144216 or http://dx.doi.org/10.2139/ssrn.3144216

Rüdiger Fahlenbrach

Ecole Polytechnique Fédérale de Lausanne ( email )

Quartier UNIL-Dorigny
Extranef 211
1015 Lausanne, CH-1015
Switzerland
++41-21-693-0098 (Phone)
++41-21-693-3010 (Fax)

HOME PAGE: http://sfi.epfl.ch/fahlenbrach.html

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Hyemin Kim

Nanyang Technological University - Division of Banking & Finance ( email )

Singapore, 639798
Singapore

Angie Low (Contact Author)

Nanyang Technological University - Division of Banking & Finance ( email )

Singapore, 639798
Singapore

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