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We investigate how board characteristics were related to the value of listed Belgian firms in the 1928-1931 period, when investor protection was weak and firms were hit by the largest financial crisis of the 20 th century. We find that firms typically had a large board and many directors held multiple directorships. Most boards included bank directors. While large, busy boards and bankers on the board were positively related to firm value before the crisis, their value significantly decreased from 1929 onwards, suggesting that these boards were less suited to face a crisis. Board busyness seems to be the main driver of negative board effects during the crisis. We also find that riskier firms which had busier and larger boards experienced a larger drop in value.

We analyze the impact of bank relationships on the performance of Belgian firms listed on the Brussels stock exchange at the start of the Great Depression, in 1929-1931. Most of these firms were affiliated with one or more banks via interlocking directorships. Taking into account the number of affiliated banks and their size, the proportion of bank directors on the board, and the number of board seats held by bank directors, we find that bank affiliations did not affect stock returns in 1929. On the other hand, firm value was positively related to the number of board seats held by the firm directors before 1929, but not after 1929. This result holds for both bank directors and other directors. Combined, our results suggest that firms did not derive any benefits from bank affiliations at the start of the Great Depression.

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