It’s still who you know! Networking for Board Candidates Circa 2021 – 2022

A recent study, published for subscribers of The Review of Financial Studies, July 2021 and redistributed
in summary form in a posting of Transformative Governance Insights, February 2022 by the Gupta
Governance Institute at Drexel University, concludes that director appointments are (still) heavily driven
by “who you know”. What is new from this study is its conclusion that this is actually good – that there is
a compelling case for the use of professional networks for sourcing candidates who are connected to
Board members (not to the CEO) to appoint directors. It found that sourcing from this pool can add
value in facilitating Board coordination, improving diversity, attracting more shareholder votes, and
often increasing the firm’s stock price.