The Peculiar Case of Horizontal Directors

Directors wield increasing influence in corporate America, making pivotal decisions regarding corporate affairs and management. A robust literature recognizes directors’ important role and examines their incentives and performance. In particular, scholars have worried that “busy directors” — those who serve on multiple corporate boards — may face time constraints that affect their performance. Director service on multiple boards leads to what has been termed as “director interlocks,” or the connection between different companies sharing the same director. While existing literature has dealt with the concept of director interlocks, little attention has been paid to the prevalence of what I term as “horizonal directors”: directors who serve on multiple corporate boards within the same industry. Horizontal directors stand at a unique intersection of antitrust law and corporate governance. Antitrust laws are meant to prevent competitors from colluding at the expense of consumers, while corporate governance is mostly focused on increasing shareholder welfare. Horizontal directors strain this subtle distinction between consumers and shareholders to its fullest extent. These directors may leverage their position to enable companies to coordinate or collude at the consumers’ expense. Yet, the same horizontal directors may confer benefits to the shareholders of these companies, from providing industry specific expertise and connections to allowing companies to inc