Horizontal directors and investment efficiency

Horizontal directors, board members who also hold board seats in same-industry peers, are common in U.S. corporations. We posit that horizontal directorships can enhance the efficiency of corporate investment decisions. Horizontal directors enjoy access to current information flows, which help boards fulfill their roles of advising and monitoring – a form of learning from peers. We find that horizontal directorships are negatively related to investment inefficiency, and with over-investment in particular. Exogenous shocks to board composition provide a causal interpretation to our findings. Our paper contributes to a nuanced view of horizontal directors by highlighting their contribution to mitigate