Network‐based appointments and board diversity

This paper investigates the occurrence of network‐based appointments and its impact on board diversity. I use data on independent board appointments between 2006 and 2012 in large publicly listed firms in the USA, and exploit directors' CVs to uncover past social connections between candidates and current directors along various dimensions—from employment, education, army and social activities. I first estimate the probability of obtaining a board seat when being socially connected to members of the recruiting board. Using different assumptions to recreate the unobserved pool of candidates, I find that being socially connected to someone on the board increases the chances of obtaining the board seat between 35.8 and 41.1 percentage points, after controlling for a large set of firm and director characteristics together with firm and director fixed effects. I then study the change in board diversity following these appointments. While appointments of new independent directors affect board diversity positively, those that are made through networks are not significantly different. However, this is likely the result of appointing directors from a significantly homogeneous sample of individuals, whether connected or not, and suggests that in order to increase board diversity, efforts should be directed towards increasing diversity in the pool of candidates

Affect (linguistics) · Business · Computer security · Corporate governance · Diversity (politics) · Exploit · Gender diversity · Homogeneous · On board · Order (exchange) · Political science · Sample (material) · Set (abstract data type) · Accounting · Computer Science · Corporate Finance and Governance · Engineering · Finance · Gender Diversity and Inequality · Law · Mathematics · Political Influence and Corporate Strategies · Psychology

• Double agency and co-evolution for two-mode networks, with an application to corporate interlocks and firms’ environmental performance

  Open Access•Tom Ab Snijders, Beata Lopaciuk-Gonczaryk•Social Networks•2025

  Añadir item

• Searching for a Corporate Savior

  Rakesh Khurana•Searching for a Corporate Savior•2002

  Añadir item

• Groups of diverse problem solvers can outperform groups of high-ability problem solvers

  Open Access•Lu Hong, Sarah E Page et al.•Proceedings of the National…•2004

  Añadir item

• Do Politically Connected Boards Affect Firm Value?

  Eitan Goldman, Jörg Rocholl et al.•Review of Financial Studies•2009

  Añadir item

• Elite Colleges and Upward Mobility to Top Jobs and Top Incomes

  Seth Zimmerman, Seth D Zimmerman•American Economic Review•2019

  Añadir item

• How to measure diversity when you must.

  David V Budescu, Mia Budescu•Psychological Methods•2012

  Añadir item

• Patronage and Selection in Public Sector Organizations

  Emanuele Colonnelli, Mounu Prem et al.•American Economic Review•2020

  Añadir item

• Women in the boardroom and their impact on governance and performance☆

  Open Access•Renée B Adams, Daniel Ferreira•Journal of Financial Economics•2009

  Añadir item

• The Costs of Patronage

  Guo Xu•American Economic Review•2018

  Añadir item

• Board diversity, firm risk, and corporate policies

  Open Access•Gennaro Bernile, Vineet Bhagwat et al.•Journal of Financial Economics•2018

  Añadir item

• Collective dynamics of ‘small-world’ networks

  Open Access•Duncan J Watts, Steven H Strogatz•Nature•1998

  Añadir item

• Theory of the firm

  Open Access•Michael C Jensen, William H Meckling•Journal of Financial Economics•1976

  Añadir item

• The Small World of the American Corporate Elite, 1982-2001

  Open Access•Gerald F Davis, Mina Yoo et al.•Strategic Organization•2003

  Añadir item

• Unobservable Selection and Coefficient Stability

  Emily Oster•Journal of Business and Economic…•2019

  Añadir item

• Birds of a Feather

  Miller Mcpherson, L Smith-Lovin et al.•Annual Review of Sociology•2001

  Añadir item