Capital Market Research Seminar: Boardroom network and corporate performance - when who you know contributes to what you know

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Time: 1.00pm - 2.00pm
Venue: Room 2035, Business School (second floor), Kingston Hill campus, Kingston Hill, Kingston upon Thames, Surrey KT2 7LB
Price: free

We are pleased to welcome Dr. Inna Abramova, London Business School, who will be presenting her research entitled 'Boardroom network and corporate performance: When who you know contributes to what you know'.

Abstract
"I study board members' role in the firm's performance through the lens of information sharing within the boardroom network. I measure the prominence of the board's information-sharing in the boardroom network with boardroom centrality. Using an instrumental variable approach based on director deaths at distant firms in the boardroom network, I isolate the effect of boardroom centrality on firm performance from the confounding factors and find that boardroom centrality deteriorates firm performance on average. This deterioration is particularly strong for R&D-intensive firms, firms with intangible assets, and firms with advertising activity.

Concurrently, firms that have no advertising activity can benefit from boardroom centrality. Therefore, the trade-off between the benefits of information collection from the boardroom network and the costs stemming from the dissemination of sensitive information to the rest of the network leads to a negative effect of boardroom centrality for firms with large amounts of proprietary information. Moreover, competition strengthens the negative impact of boardroom centrality on firm performance because the timely adoption of effective policies is highly important in competitive industries.

This paper examines a difficult-to-measure and unobservable concept of information-sharing between directors, adding to the literature on directors' value and providing a research design that can isolate the centrality effects in various applications."

For further information about this event:

Contact: Salma Ibrahim, Professor of Accounting
Email: s.ibrahim@kingston.ac.uk