# 15-135/V (2015-12-18; 2015-02-20)

Richard W. Carney, Australian National University, Australia; Travers Barclay Child, VU University Amsterdam, the Netherlands
networks; political connections; interlocking directorates; family ownership; corporate governance
JEL codes:
G3, G14, L14

Previous research on firm performance does not adequately account for the interrelatedness of a firm's professional connections, political ties, and family business-group affiliation. Many widely-cited findings may therefore be subject to confounding bias. To address this problem, we adopt a holistic approach by assembling a new dataset covering professional, political, and family networks for 1,290 large East Asian firms. We find that professional networks buoyed performance during the 2008 financial crisis; political and family networks did not. We provide evidence that information access is a key mechanism underlying the effect of professional networks. A one standard deviation improvement to a firm's professional network position cushioned the fall in quarterly ROA by approximately 35% during the crisis.