Director Networks, Turnover, and Appointments

Luc Renneboog, Yang Zhao

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Abstract

This paper analyzes the labor market (turnover and appointments) of executive and non-executive directors by means of social network methodology. We find that directors with strong networks are able to obtain labor market information that enables them to leave their firm more easily for better opportunities. Networks also mitigate information asymmetry problems of external director appointments. Furthermore, the strong impact of indirect connections is in line with the ‘strength of the weak ties’ theory. The fact that direct connections are less important signifies that the connections to people that are close and local are likely to convey redundant information, whereas connections to distant individuals are more efficient in terms of information acquisition and labor market performance improvement.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages42
Volume2018-035
Publication statusPublished - 11 Sep 2017

Publication series

NameCentER Discussion Paper
Volume2018-035

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Keywords

  • corporate governance
  • director networks
  • director turnover
  • director appointments

Cite this

Renneboog, L., & Zhao, Y. (2017). Director Networks, Turnover, and Appointments. (CentER Discussion Paper; Vol. 2018-035). Tilburg: CentER, Center for Economic Research.