Help or Hindrance? Boardroom Network Connectivity and Firm Performance
While boardroom networks should act as a conduit for resource sharing between firms, and in doing so improve firm performance, recent evidence on the value of connected boards is limited and inconclusive. This study aims to provide additional evidence on the impact of board connectivity on firm performance by exploring Australian listed firms between 2001 and 2011. We employ four dimensions of connectivity; measuring the quantity, speed and quality of information flow and resource sharing, and a firms access to the best-connected boards. We also employ a factor of the four connectivity dimensions. Our findings show more connected boards have lower firm performance, measured with Tobin’s Q. The results remain consistent after controlling for alternative measures of firm performance, and model specifications. The results suggest that boardroom networks are not a value-enhancing tool for boards.