Peer firms and board appointments in family firms

This paper examines how neighbouring companies affect family firms’ decision to appoint non-family directors. Results indicate that being geographically close to firms with non-family directors increases a focal firm’s likelihood of having non-family members in its own board. This finding holds using a regulatory change that generates exogenous variations in the boards of local peer firms. Moreover, this finding is stronger when the firm is smaller, when the age similarity between local firm leaders is higher, and when the firm is located in areas that are densely populated or that feature strong attachment to the local community.