Identifying Board of Director Network Influence for Firm Characteristics

We utilize network analysis to evaluate the relationship between firms' characteristics and board of director networks. In a sample of 20 largest firms by market value from the energy and the utility industrials, 10 from each sector, we cluster the firms by their firm-level characteristics, as well as develop a multiplex network of the firms' board members consisting of two major layers, one for board members' direct connections and another for their indirect connections. Additionally, 4 sub-layers of each major layer of the multiplex network represent corporate, non-profit organization, education and government/military connections between the board members. Each layer of the multiplex network is weighted so that their combined effect can be depicted as a single layered directors' network. The weights of the multiplex directors' network are learned by relating a firm's director network characteristics with the firm cluster characteristics. We observe that director networks display significant connectivity at all multiplex network layers and firms belonging to the same cluster display similar director network characteristics, specifically enhanced by appropriate weighting of director network layers. The optimal value of network layer weights are found by optimizing the cohesion of firms in a cluster and the director network multiplex layers