Elite Directors and Firm Performance

University essay from Handelshögskolan i Stockholm/Institutionen för finansiell ekonomi

Abstract: This thesis investigates the effect elite board directors have on firm performance. With reference to the social networks associated with both board appointments and elite education, a director is designated as an elite director if he or she holds multiple directorships, or is educated at an elite university. Our results show that having directors with multiple directorships on the board has a negative impact on firm performance. These findings are in line with one strong flank of previous research, indicating that directors with multiple directorships are too busy to satisfactorily carry out their board duties. Furthermore, our results show no significant evidence of a correlation between directors holding elite educational degrees and firm performance.

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