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Do Institutional Directors Matter?

Author

Listed:
  • Heng Geng

    (Victoria University of Wellington)

  • Harald Hau

    (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute))

  • Roni Michaely

    (The University of Hong Kong; ECGI)

  • Binh Nguyen

    (RMIT University Vietnam)

Abstract

The large increase in common institutional ownership raises significant antitrust concerns, even if the precise channel of any potential influence on market outcomes is unclear. Using a novel dataset on shareholders’ board representation, we examine the role of common institutional directors (i.e., joint board representation by institutional shareholders) as one such potential channel with three main findings. First, institutional board representation is extremely low relative to extensive institutional ownership. Second, common institutional directors on rival firm boards are rare. Third, common institutional directors show no incremental effect on market outcomes amidst the positive relationship between common ownership and firm profitability.

Suggested Citation

  • Heng Geng & Harald Hau & Roni Michaely & Binh Nguyen, 2022. "Do Institutional Directors Matter?," Swiss Finance Institute Research Paper Series 22-89, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2289
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    Keywords

    Common ownership; institutional board representation; competition policy;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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