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WHOM YOU CONNECT WITH MATTERS: DIRECTOR NETWORKS AND FIRM LOCATION
Author(s) -
Baran Lindsay,
Wilson Rachel
Publication year - 2018
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/jfir.12141
Subject(s) - endogeneity , metropolitan area , business , sample (material) , economies of agglomeration , compensation (psychology) , channel (broadcasting) , industrial organization , economic geography , economics , telecommunications , econometrics , economic growth , geography , psychology , chemistry , archaeology , chromatography , computer science , psychoanalysis
We examine whether board members serve as a channel for remotely located firms to access the benefits from business‐dense areas due to economies of agglomeration. We find that geographically remote firms benefit from connections to firms in top metropolitan statistical areas (MSAs) for business density. After controlling for director compensation, we find connections to top MSA firms mitigate the negative effect of increased distance from business‐dense areas. We address concerns of endogeneity by exploring a sample of firms whose directors gain board seats at top MSA firms and find a similar positive impact of connections to top MSA firms.