Sharing a Director with a Peer

Tatjana Berg, Philipp Horsch and Markus Schmid

No 1507, Working Papers on Finance from University of St. Gallen, School of Finance

Abstract: Exploiting a unique feature of the Clayton Antitrust Act, we analyze how directors holding outside directorships at peer firms affect firm value and performance of financial firms. We find that directors serving simultaneously at horizontally-related firms have a negative impact on firm value and performance, whereas directors holding outside directorships in vertical industries, i.e., customer or supplier industries, enhance firm value and performance. Our results suggest a tradeoff between director experience and conflicts of interest. Further, stock market reactions provide evidence that investors recognize the value-diminishing effect of horizontal directors as well as the value-increasing effect of vertical directors.

Keywords: Governance; Firm value; Financial institutions (search for similar items in EconPapers)
JEL-codes: G20 G32 G34 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015-04
New Economics Papers: this item is included in nep-bec and nep-cfn
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1507.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:usg:sfwpfi:2015:07

Access Statistics for this paper

More papers in Working Papers on Finance from University of St. Gallen, School of Finance Contact information at EDIRC.
Bibliographic data for series maintained by ().