Inside the director network: When directors trade or hold inside, interlock, and unconnected stocks

B-Tier
Journal: Journal of Banking & Finance
Year: 2020
Volume: 118
Issue: C

Authors (3)

Berkman, Henk (University of Auckland) Koch, Paul (not in RePEc) Westerholm, P. Joakim (not in RePEc)

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Analysis of shareholdings reveals that corporate directors generate positive alpha when they hold board interlocked stocks, where they are not an insider but a current co-board member is. In contrast, directors do not outperform when they hold inside stocks or other stocks unconnected to the board network. Analysis of trades shows that directors outperform when they buy or sell their own company's stock as insiders. They also outperform when they buy interlocked stocks. Results are similar for trades made before firm-specific information events. We also find limited support for the hypothesis that industry familiarity improves performance.

Technical Details

RePEc Handle
repec:eee:jbfina:v:118:y:2020:i:c:s0378426620301588
Journal Field
Finance
Author Count
3
Added to Database
2026-01-24