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- Title
Peer Effects in Corporate Governance Practices: Evidence from Universal Demand Laws.
- Authors
Foroughi, Pouyan; Marcus, Alan J; Nguyen, Vinh; Tehranian, Hassan
- Abstract
Firms in the same networks tend to have similar corporate governance practices. However, disentangling peer effects, where governance practices propagate from one firm to another, from selection effects, where firms with similar preferences self-select into linked groups, is difficult to do. Studying board-interlocked firms, we utilize the staggered adoption of universal demand laws across states to identify and estimate causal peer effects in governance policies. We find support for the existence of peer effects in the adoption of antitakeover provisions. The impact of universal demand laws on the governance experience of interlocking directors likely explains these effects.
- Subjects
CORPORATE governance; PEERS; BUSINESS networks; ANTITAKEOVER strategies; ECONOMIC demand
- Publication
Review of Financial Studies, 2022, Vol 35, Issue 1, p132
- ISSN
0893-9454
- Publication type
Article
- DOI
10.1093/rfs/hhab025