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Quantitative Research

Does board centrality predict future financial performance?

We investigate whether corporations with board members that are simultaneously on several corporate boards perform better than corporations whose board members aren't as well-connected.

We explore the importance of board connectivity

In this research note, we will examine how connectivity between firms is related to financial performance. 

The hypothesis being that corporations, with board members that are simultaneously on many other corporate boards, perform better than corporations whose board members aren't as well-connected.

in this paper, we examine:

  • Refinitiv Officers & Directors content set through the lens of an undirected graph and use network centrality to quantify how well-connected each board is
  • A specific type of centrality, eigenvector, which gives more weight to important connections (i.e. other well-connected firms).
  • The use of Refinitiv Fundamentals Point-in-Time content to calculate Forward 1-Year Return on Assets to evaluate the relative performance of companies based on the z-score of their centrality.
  • 2.5M
    contacts in Refinitiv Officers and Directors
  • 90,000
    companies covered in Refinitiv Fundamentals Point-In-Time data

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