Networks in the board of directors
Working Paper, 2022. When landing a board of directors job, a significant portion of external candidates enjoys preexisting relationships with board members. These relationships may be entirely fortuitous, could reflect self-serving behavior on behalf of board members, or simply be used as a screening device to recruit individuals in extremely competitive positions. This paper uses a consideration set framework to disentangle these explanations. I argue that estimates of the impact of preexisting relationships on a director’s probability of appointment are biased upwards in the literature. I make additional observations on the effect of a director’s personal network on her likelihood of appointment.