This study reveals that the connectedness between US firms can be both “good” (ownership) and “bad” (boardroom). Network links through ownership increase return on assets by 0.12%, while board networks decrease it by 0.07%. BIG3 institutional investors’ connections yield higher return on assets, particularly among same-industry firms, indicating beneficial product-market peer effects. Conversely, boardroom connectedness negatively affects performance, with male directors driving this effect. We exploit the annual Russell 1000/2000 index reconstitution as an exogenous shock to institutional ownership networks to establish causality.
Presented at the Owners as Strategists Conference, IGPRC2022 semifinals, FMCG22 Conference, NFI-Oxford Conference on Common Ownership, Experimental IO and Governance, and AFA 2023 PhD poster session
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4260448
(solo authored paper)
Annalisa Tonetto 