IDLab Workshop

Marina Zavertiaeva presented the study "The diffusion of capital structure through directors' professional networks".

Interlocking directorates can facilitate effective knowledge transfer, thereby helping organizations improve their performance and achieve their goals. Empirical studies have shown that interlocking directorates can influence different policies of a company, such as investment and dividend policies. However, limited research exists on the impact of interlocking directorates on capital structure decisions. The study presented at the IDLab workshop aims to determine whether firms imitate the capital structure of firms linked to them through board interlocks. The sample includes the largest Russian non-financial public companies for the period 2013-2020, given the importance of personal connections in doing business in Russia. The study uses a network-based approach to construct the connected firms' leverage metric. The findings of this study can contribute to a better understanding of the impact of interlocking directorates on capital structure decisions and complement the theory of informational cascades.