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CEO networks and the labor market for directors

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  • Kim, Hyemin
  • Fahlenbrach, Rüdiger
  • Low, Angie

Abstract

Directors at firms with well-connected CEOs are more likely to obtain directorships at firms that are connected to the CEOs. Recommended directors do not become beholden to the CEO. Reciprocity is an important determinant of recommendations because CEOs are more likely to recommend their directors if they received help from their network filling vacant board positions. CEOs also benefit strategically from the additional appointments of their directors. Analyses of appointment announcement returns and director election results show that shareholders are not concerned by such recommendations. The results highlight the importance of CEOs as intermediaries in the director labor market.

Suggested Citation

  • Kim, Hyemin & Fahlenbrach, Rüdiger & Low, Angie, 2023. "CEO networks and the labor market for directors," Journal of Empirical Finance, Elsevier, vol. 70(C), pages 1-21.
    • Handle: RePEc:eee:empfin:v:70:y:2023:i:c:p:1-21
    DOI: 10.1016/j.jempfin.2022.11.001
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    More about this item

    Keywords

    Board of directors; Network connections; Director labor market; CEO rolodex;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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