Director networks and firm value

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Journal of Corporate Finance
Are the professional networks of directors valuable? To separate the effect of director networks on firm value from the effect of other value-relevant director attributes, we use the unexpected deaths of directors as a shock to the director networks of interlocked directors. By studying the announcement returns and using a difference-in-differences methodology, we find the negative shock to director networks reduces the value of interlocked firms – a result that is stronger for firms that are more likely to benefit from access to information from board connections. This evidence is consistent with director networks being valuable and improving access to information.
This article was originally published in Journal of Corporate Finance. The version of record is available at: © 2024 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (
board of directors, network centrality, quasi-natural experiment, firm value
Bakke, Tor-Erik, Jeffrey R. Black, Hamed Mahmudi, and Scott C. Linn. “Director Networks and Firm Value.” Journal of Corporate Finance 85 (April 2024): 102545.