Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/243277 
Year of Publication: 
2021
Series/Report no.: 
SAFE Working Paper No. 269
Version Description: 
July 2021
Publisher: 
Leibniz Institute for Financial Research SAFE, Frankfurt a. M.
Abstract: 
We present causal evidence on the e↵ect of boardroom networks on firm value and compensation policies. We exploit a ban on interlocking directorates of Italian financial and insurance companies as exogenous variation and show that firms that lose centrality in the network experience negative abnormal returns around the announcement date. The key driver of our results is the role of boardroom connections in reducing asymmetric information. The complementarities with the input-output and cross-ownership networks are consistent with this channel. Using hand-collected data, we also show that network centrality has a positive e↵ect on directors' compensation, providing evidence of rent sharing.
Subjects: 
Firm Networks
Natural Experiment
Executives' Compensation
Interlocking Directorates
JEL: 
D57
G14
G32
L14
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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