Does prestigious board membership matter? Evidence from New Zealand

Abstract

This study investigates whether ‘prestigious’ multiple board membership is positively associated with firm performance. We employ Resource Dependency theory to explain why performance outcomes may be improved by the presence of ‘prestigious’ multiple directorships. Our analysis relies on extensive hand‐collected data on New Zealand company directorships. The results support the contention that ‘prestigious’ multiple directorships are related to better accounting and market performance. Conclusions reflect upon how Resource Dependency theory informs this phenomenon and how ‘prestigious’ board members may be a valuable resource for firms. We also reveal how these findings expose a new avenue for board governance research.

“What do interlocks do” revisited – a bibliometric analysis

“…Related to the literature on the corporate elite, legitimacy, reputation and prestige are also key aspects of director interlocks, both in terms of the causes of interlock ties and how interlock subsequently shape firm behaviour and performance (Jahan et al , 2020; Knoben and Bakker, 2019). Within inter-organisational literature, many have highlighted the preference of firms to appoint prominent directors and establish ties with prestigious firms (Acharya and Pollock, 2012; Flickinger et al , 2016), this has been identified as particularly important for younger firms (Gulati and Higgins, 2003).…”

Market ranking and network structure: pathway to dominance

“…This has resulted in another stream of literature examining how links to prominent and prestigious firms impact performance. For instance, Jahan et al (2020) find, in an examination of firms from New Zealand, that prestigious board members have a positive impact on firm performance (measured by both market-and accounting-based metrics). Gulati et al (2011) propose a set of key mechanisms to explain how network resources contribute to firm Market ranking and network structure performance: reach, richness and receptivity.…”