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Sharing a Director with a Peer

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  • Berg, Tatjana
  • Horsch, Philipp
  • Schmid, Markus

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.

Suggested Citation

  • Berg, Tatjana & Horsch, Philipp & Schmid, Markus, 2015. "Sharing a Director with a Peer," Working Papers on Finance 1507, University of St. Gallen, School of Finance.
    • Handle: RePEc:usg:sfwpfi:2015:07
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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1507.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ooi, Elizabeth, 2020. "Directors who serve multiple pension funds: Are they conflicted or skilled?," Journal of Banking & Finance, Elsevier, vol. 113(C).

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    More about this item

    Keywords

    Governance; Firm value; Financial institutions;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • 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

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