Corporate demand for social connections drives director compensation premiums
The study looked at how the connections of outside directors in a company's boardroom affect their pay. They found that companies pay more to directors with strong social networks. Companies facing problems like bad mergers or performance declines pay even more for well-connected directors. These directors play important roles on the board and serve on multiple boards. This suggests that companies value directors with strong social connections and are willing to pay them more for their expertise.