Review of Accounting Studies

, Volume 19, Issue 3, pp 1086-1119

First online:

Board interlocks and the diffusion of disclosure policy

  • Ye CaiAffiliated withSanta Clara University
  • , Dan S. DhaliwalAffiliated withUniversity of Arizona and Korea University
  • , Yongtae KimAffiliated withSanta Clara University Email author 
  • , Carrie PanAffiliated withSanta Clara University

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We examine whether board connections through shared directors influence firm disclosure policies. To overcome endogeneity challenges, we focus on an event that represents a significant change in firm disclosure policy: the cessation of quarterly earnings guidance. Our research design allows us to exploit the timing of director interlocks and therefore differentiate the director interlock effect on disclosure policy contagion from alternative explanations, such as endogenous director-firm matching or strategic board stacking. We find that firms are more likely to stop providing quarterly earnings guidance if they share directors with previous guidance stoppers. We also find that director-specific experience from prior guidance cessations matters for disclosure policy contagion. The positive effect of interlocked directors on the likelihood of quarterly earnings guidance cessation is particularly strong for firms with interlocked directors who experienced positive outcomes from prior guidance cessation decisions. Overall, our evidence is consistent with interlocked directors serving as conduits for information sharing that leads to the spread of corporate disclosure policies.


Disclosure policy Board interlocks Board networks Social networks Earnings guidance Corporate governance

JEL Classification

G34 M41