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ABSTRACT Research Question/Issue This study explores the moderating effects of board network centrality on the relationship between CEO overconfidence and acquisition intensity. Research Findings/Insights Using a panel of S&P 1500 firms from 2002 to 2018, we find that CEO overconfidence is positively associated with acquisition intensity. This relationship is weakened when boards occupy more central positions in the interlocking director network. Furthermore, this mitigating effect is stronger when (1) connected firms exhibit greater variability in acquisition intensity, (2) directors maintain stronger internal social connections, and (3) boards have greater female representation. Theoretical/Academic Implications We conceptualize board network centrality as enhancing information access by exposing directors to non‐redundant external experiences. However, access alone does not ensure effective oversight. The governance effect of centrality depends on internal processing conditions that facilitate information sharing, elaboration, and critical evaluation. By distinguishing information access from information‐processing capacity, we provide a more precise explanation of how board networks shape responses to CEO overconfidence. Practitioner/Policy Implications Our findings indicate that effective oversight by the board of directors over overconfident CEOs requires both access to diverse external information and strong internal deliberation processes. Firms may benefit from constructing boards that combine strategic network positions with internal conditions that facilitate thorough evaluation of strategic decisions.
Xu et al. (Sun,) studied this question.