News and Insights

Institutional Directors: Do They Matter? - new paper by Harald Hau

 

The large increase in common institutional ownership raises significant antitrust concerns, even if the precise channel of any potential influence on market outcomes is unclear.

Using a novel dataset on shareholders’ board representation, GFRI's Prof. Harald Hau and his co-authors examine the role of common institutional directors (i.e., joint board representation by institutional shareholders) as one such potential channel with three main findings.

First, institutional board representation is extremely low relative to extensive institutional ownership. Second, common institutional directors on rival firm boards are rare. Third, common institutional directors show no incremental effect on market outcomes amidst the positive relationship between common ownership and firm profitability.

 

The study was co-authored with Heng Geng, Roni Michaely and Binh Nguyen, and its summary was published in the Columbia Law School's Blog on Corporations and the Capital Markets.

For the full paper >

 

Harald Hau is the Director of the Geneva Master of Advance Studies in Finance (GEMFIN) program.

 

Jan 23, 2023

News and Insights