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Working Papers
"Board Diversity of Industry Expertise: Impacts on Investment, R&D, and Product Markets." Abstract: An extensive literature has analyzed the monitoring function of corporate board directors, yet analyses of the advising role of corporate directors have been rare. This study fills this gap by constructing director-specific industry expertise measures for all directors of S&P 1,500 firms from 2003-2013. I analyze both the determinants of the demand for directors with diverse industry expertise as well as the impact of director diversity on investment and firm performance. Exploiting exogenous variation on director deaths I show that increased board diversity systematically impacts capital expenditures, R&D expenditures, and optimal product differentiation in major corporations. "Competitive Differentiation Effects of Board Interlocks" with Mu-Jeung Yang Abstract: What determines the direction or similarity of firms innovative activity? We explore the role that networks of shared board members play in shaping competitive positioning and innovation at public companies. To estimate causal effects, we exploit exogenous variation of director deaths to show that firms that are closer connected through board networks are more differentiated in terms of product market shares, product similarity and even patenting and patent citations. Furthermore, we find evidence of significant spillover effects to third-party firms in the network, which are not directly affected by a director death. We investigate the degree to which these results can be explained by tacit collusion as opposed to optimal product differentiation "Common Management Spillover Effects of R&D" with Mu-Jeung Yang Abstract: We investigate a new R&D spillover mechanism, common management links. Since shared board member can be important conduits of information sharing between firms; firms with more shared directors or more commonly managed can provide more credi- ble competitive positioning information to the firm. We test this idea by constructing R&D spillover pools due to common management by weighting a peer firm’s R&D expenditure by it’s degree of common management with the firm. We find that firms with access to larger common management spillover pools have better outcomes. They have higher firm values and spend more in R&D, CAPX, and SG&A. More importantly, firms that have larger common management spillover pools, rely less on noisier information obtained through observing rival and technological peer R&D. Rise in Competitive Positioning and Implications on Firm Markup with Mu-Jeung Yang Works in Progress
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