Are Connected Directors Valuable Advisors or Ineffective Monitors?Evidence from Diversification Discount

• Main Authors: Luo-Pin Chen, 陳羅平
• Other Authors: T.K. Chou
• Format: Others
• Language: en_US
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/52235300804046906719

碩士 === 國立中正大學 === 會計與資訊科技研究所 === 101 === We investigate the impact of board centrality on the valuation of diversification. Our empirical results show that well-connected directors improve firm value more in diversified firms than in focused firms. Our results are robust to controlling for potential endogeneity bias, alternative measure of excess value, and different sample periods. Overall, the evidence suggests that well-connected board members accumulate managerial influence and information collection ability and can therefore provide valuable advice to tilt resource allocations among segments, which in turn mitigates diversification discount.