What makes a board director better connected? Evidence from graph theory

Abstract

We are interested in quantifying and uncovering the relationships that form between the board directors of companies. Using these relationships we com-pute three network centrality measures for each director in the network and employ them in the analysis of connectedness of directors. Our focus in this study is on the attributes that make a board member better connected. The biological, educational and experiential attributes are used as independent variables to develop a regression model measuring the impact on the three connectivity measures (degree, between-ness and closeness). Our results show that “Age” has a direct significant impact on all connectedness measures of a board member. We also find that female directors have a higher measure of degree centrality and betweenness centrality, but lower closeness. The number of foreign degrees increases the degree centrality and be-tweenness centrality but not closeness. The three identified characteristics of “Age”, “Gender”, and “Education” are supporting the idea that a high level of social connection can in part be expected by the characteristics of individual board members and can explain up to 25% of the board member’s connectivity.