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1 – 10 of over 2000
Article
Publication date: 5 October 2018

Ana B. Hernández-Lara and Juan P. Gonzales-Bustos

Boards of directors of large companies all over the world frequently have a certain number of shared directors, which can be motivated by social structures that foster different…

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Abstract

Purpose

Boards of directors of large companies all over the world frequently have a certain number of shared directors, which can be motivated by social structures that foster different types of links, including investments and vertical relationships. The purpose of this paper is to identify the effects that board interlocking exerts on innovation, considering the different nature of shared directors that finally determines the type of links dominating the boards.

Design/methodology/approach

Panel regression analyses were conducted using data collected from 69 Spanish listed innovative sector companies during the period 2010–2014, which provided an unbalanced panel of 325 data observations.

Findings

The results suggested that the typology of interlocks determined their effects on innovation, which had a positive influence when independent and extra-industry directors held multiple directorships, whereas it was negative in the case of intra-industry and women interlocking directors.

Practical implications

This study provided evidence for the diverse effects of interlocking directorates and contributed to the open debate on the best board composition for improving business innovation, considering the common feature of shared directorships.

Originality/value

The value of this research was twofold. On the one hand, the study considered a wide typology of interlocking directorates, such as women, affiliated and independent directors, intra- and extra-industry directorships, as well as shared directors from the same country. On the other hand, the effects of these different interlocking directorate typologies were analysed on innovation by considering different innovation indicators.

Details

Management Decision, vol. 57 no. 10
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 8 August 2016

Carlos Rafael Avina-Vazquez and Shahzad Uddin

The purpose of this paper is to investigate whether a pattern of interlocking directorates is emerging following reforms in Mexican corporations, and who, if any, are the powerful…

Abstract

Purpose

The purpose of this paper is to investigate whether a pattern of interlocking directorates is emerging following reforms in Mexican corporations, and who, if any, are the powerful actors in this network. Drawing on the Bourdieusian notion of social capital, the paper also analyses theoretically the interlocking directorates, networks and powerful actors, and their influences on and potential implications for corporate governance mechanisms.

Design/methodology/approach

The data used in the study consisted of 1,442 internal and external board members of the population of 126 Mexican corporations trading on the Mexican Stock Market as of January 2011. Use of social network analysis (SNA) demonstrates individuals’ links with corporations and allows the production of spatial maps to visualise the network structure of interlocking boards.

Findings

Using the measures of SNA developed by Freeman (1979 and Bonacich (1972), the authors identify the most powerful and influential directors in the network structure of board members in Mexico. Board members with the greatest number of connections occupy central positions in the network. The authors also find a catalogue of corporate governance scandals. The inclusion of independent directors seems to have had no influence in ensuring better corporate governance.

Research limitations/implications

Mapping out the directors’ links might offer excellent opportunities for policy makers to see how many companies a single director represents, how they share boards, and the implications for minority shareholders of sharing boards, and to understand the workloads of directors in carrying out the monitoring tasks expected of them.

Originality/value

This paper makes an important contribution by employing SNA to illustrate interlocking directorates and the positions of powerful and influential actors. Examining networks of directors from a “social capital” point of view also provides an understanding of why the role of independent directors remains toothless in family-dominated corporations.

Details

Journal of Accounting in Emerging Economies, vol. 6 no. 3
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 16 March 2018

Allam Hamdan

The purpose of this paper is to investigate what effect, if any, foreign ownership has on the relationship between board interlocking and firm performance.

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Abstract

Purpose

The purpose of this paper is to investigate what effect, if any, foreign ownership has on the relationship between board interlocking and firm performance.

Design/methodology/approach

Data on 131 firms from various sectors listed in the Saudi Financial Market during the period of 2016 were collected. Board interlocking was measured using two indicators (number of interlocks and number of interlocks per member) and then it was divided into three levels (1-6/7-14/15 or more). As for the performance of firms, it was measured using two indicators: one operational (return on assets and the other financial (return on equity)). Foreign ownership was considered as a moderator variable. In addition to firm and board characteristics, a set of control variables related to ownership structure was used.

Findings

Results provide some support for the “busyness hypothesis” which postulates deterioration in the effectiveness of directors, in terms of their monitoring role, when increasing the number of interlocks per director. Results also manifest a positive effect exerted by foreign ownership in terms of turning around the otherwise negative relationship between board interlocking and firm performance in the second level of interlocking (7-14) Code Article 12’s limit on the number of interlocking per director to a maximum of five directorships. However, there is limited compliance to this code among Saudi firms. The study indicates the need to comply with the governance code in order to enhance governance which undercut performance.

Originality/value

Highlighting the role of foreign ownership in enhancing corporate governance in a conservative business environment characterized by relational networks with gaps in corporate governance.

Details

International Journal of Managerial Finance, vol. 14 no. 3
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 29 November 2023

Richard Ramsawak, Samuel Buertey, Greeni Maheshwari, Duy Dang and Chung Thanh Phan

This paper explores the relationship between board interlocks and firm outcomes by reviewing the most recent peer-reviewed articles examining this research theme.

Abstract

Purpose

This paper explores the relationship between board interlocks and firm outcomes by reviewing the most recent peer-reviewed articles examining this research theme.

Design/methodology/approach

A systematic and bibliometric methodology of assessing 369 peer-reviewed articles from the Web of Science (WoS) database was applied. The study also leverages key R-packages litsearchr and Bibliometrix software to enhance the descriptive and thematic literature analysis to identify gaps and opportunities for new research.

Findings

This study confirms a rapid increase in articles on this thematic area, over the last decade, with increasing collaboration occurring among researchers in the United States, Europe, China, South Korea and India. Four core research clusters are identified. The first and largest cluster links interlocked directors to issues related to corporate governance and firm outcomes. The second cluster links social network theory, interlocking directorates and firm outcomes. Smaller emerging research clusters include topics related to ownership structure, board size, political connectedness and impacts on firm outcomes. The final cluster examines the influence of board interlocks on market value and firm innovation.

Practical implications

Interlocked directors can have both positive and negative impacts on a wide variety of firm outcomes. This study places great interest in the selection of new directors, ensuring that the selection has aligned with the needs and interests of the company and disclosures of potential competing interests are declared and considered. Equally important are the governance practices used to monitor directors' behavior and to protect the interest of shareholders and the firm. This is particularly relevant in the internal appointment of interlocked directors to critical positions, such as audit committees or instances where interlocked directors may simultaneously hold CEO or executive leadership positions in other companies.

Originality/value

This paper examines the board interlocks literature related to firm outcomes. Additionally, this review identifies several topics and disciplines which, if pursued, could enrich the literature and promise new avenues for future research.

Details

Management Decision, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 10 January 2022

Xueji Liang, Lu Dai and Sujuan Xie

Corporate social responsibility (CSR) reporting is a widely accepted procedure for firms to disclose their performance in multiple domains, including environmental protection…

Abstract

Purpose

Corporate social responsibility (CSR) reporting is a widely accepted procedure for firms to disclose their performance in multiple domains, including environmental protection, labour welfare, protection of human rights, community services, contribution to society and pursuit of product safety. This study aims to investigate whether and how board interlocks affect firms’ decisions with respect to CSR reporting. This study argues that board interlocks act as an important source of social pressure and firms are influenced by their peer firms to adopt CSR reporting.

Design/methodology/approach

This paper sampled listed companies on China’s Shanghai and Shenzhen Stock Exchanges from 2009 to 2015. The data were collected from Runling database and China Stock Market and Accounting Research database. A multi-period logit model was used to conduct the main regression analysis and the propensity score matching method was used in the robustness checks.

Findings

A study based on a sample of Chinese publicly listed firms from 2009 to 2015 confirms the argument and shows that sharing a common director on the board with a previous CSR reporter facilitates the firm’s engagement in CSR reporting. Furthermore, this study shows that the influence of board interlocks on CSR reporting depends on the following three characteristics: status of the interlocking director, size of the linked CSR reporter and performance implications of previous CSR activities.

Research limitations/implications

The interpretation of the current findings should be considered in light of these limitations. First, while board interlocks are an important social aspect of institutional pressure, other types of social pressure exist. Second, the focus is on CSR reporting decisions. However, CSR reporting can also be symbolic, with little substantive quality to improve CSR-related activities. Third, this study argues that both regulatory and social pressures influence the decision to report on CSR. However, this study was unable to determine the weight of each pressure. Future research should follow this direction. Finally, the influence of certain behaviours through interlocks is stronger in the initial stage of the institutionalisation process.

Practical implications

The findings of this study have important implications for practitioners. First, the messaging role of interlocking directors suggests that director selection should consider the effectiveness of information transfer. Knowing and analysing specific interlock and its links with the firm’s strategy is very important. Meanwhile, firms should be vigilant that the balance between the access to information and loss of autonomy because searching for information related to firms’ strategic decisions might challenge current strategy. Second, the results of the study suggest that to effectively urge companies to engage in CSR reporting, government and policy makers should consider beyond institutional pressure, but also be sensitive to the social pressure exerted upon the companies.

Social implications

The positive role of board interlocks on corporate voluntary CSR reporting can not only make valuable contributions to the Chinese society but also, as an important participant of global economy and trade, the Chinese interlocking directors’ contribution to CSR reporting have global benefits.

Originality/value

This study extends the institutional perspective on CSR reporting by uncovering the effect of social pressure. It advances the literature on the antecedents of CSR reporting by linking board interlocks to CSR reporting. Finally, the study enriches the broader interlock literature by delineating three specific characteristics of interlocks that influence CSR reporting.

Details

Sustainability Accounting, Management and Policy Journal, vol. 13 no. 3
Type: Research Article
ISSN: 2040-8021

Keywords

Article
Publication date: 3 April 2018

Md. Borhan Uddin Bhuiyan and Jamal Roudaki

This paper aims to examine the existence of related party transactions (RPTs) in failed financial companies in New Zealand when firms have interlocking directors on the board. We…

Abstract

Purpose

This paper aims to examine the existence of related party transactions (RPTs) in failed financial companies in New Zealand when firms have interlocking directors on the board. We also examine the role of auditors in the review of RPTs. We anticipate that inter-company director relationships promote RPTs, while reputable large auditors (i.e. Big4) restrict the practice.

Design/methodology/approach

This study uses multivariate analysis to examine the determinants of RPTs. We use an unique, hand-collected database of New Zealand finance companies all of which collapsed during the years 2006-2011.

Findings

Using a sample of 65 firms (including 38 failed finance firms) and 219 firm-year observations, we found that almost half of the failed finance firms were engaged in RPTs. For the failed firms, those that were engaged in RPTs were mostly represented by interlocking directors and were audited by non-Big4 auditors, implying lower monitoring quality may facilitate RPTs. Using a sub-sample, we also found evidence that firms engaged in RPTs were later convicted of questionable accounting and disclosure practices.

Practical implications

This research is beneficial to regulators and audit professionals in understanding the potential for adverse outcomes associated with interlocking directors and undisclosed RPTs. While interlocking directors could enrich the external connections of a firm which might facilitate capital resourcing, this study suggests regulators might encourage firms to disclose RPTs when the firm has higher interlocked directors.

Originality/value

This study is the first to examine the association between RPTs and interlocking directors using a sample of failed finance companies. RPTs and lack of disclosure were widely attributed with being the determinants of corporate failure in the finance sector. However, failed finance firms remain widely under-researched because of a lack of available data. This study circumvent this limitation by using print media and business news portals to collate information on RPTs and interlocking directors. While prior research indicates that weak corporate governance leads to poor accounting practice, using the interlocking board as a proxy for weak corporate governance, this study is the first to substantiate the adverse effect of interlocking boards and undisclosed RPTs with corporate failure.

Details

Pacific Accounting Review, vol. 30 no. 2
Type: Research Article
ISSN: 0114-0582

Keywords

Article
Publication date: 30 November 2020

Matthew Smith and Yasaman Sarabi

It has been over 20 years since the landmark publication of Mizruchi (1996) and his examination of “what do interlocks do?”. Since then, the nature of interlocks and subsequent…

Abstract

Purpose

It has been over 20 years since the landmark publication of Mizruchi (1996) and his examination of “what do interlocks do?”. Since then, the nature of interlocks and subsequent research on the subject has evolved. This paper aims to revisit the literature on interlocking directorates through a quantitative bibliometric analysis.

Design/methodology/approach

This study undertakes a bibliometric analysis of literature citing the Mizruchi (1996) to examine the state of research following up on “what do interlocks do”. This study examines 718 publications using keyword and co-word analysis, along with a thematic analysis to revisit the research that has followed Mizruchi’s topic of what do interlocks do.

Findings

This study finds that the topics of the corporate elite, capitalist economy and corporate governance have remained prominent themes in the field. Research areas that are emerging in the field of interlocking directorates include gender diversity, globalisation and advancing theoretical frameworks.

Originality/value

This paper provides a quantitative bibliometric analysis to revisit the extant literature on “what do interlocks do”, examining a high number of articles to identify areas which could be developed to advance research in the field.

Details

Management Research Review, vol. 44 no. 4
Type: Research Article
ISSN: 2040-8269

Keywords

Article
Publication date: 3 August 2015

Rosa Caiazza and Michele Simoni

This paper aims to investigate if existing theories really explain interlocking directorates in several countries. Literature on interlocking directorates is huge and fragmented…

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Abstract

Purpose

This paper aims to investigate if existing theories really explain interlocking directorates in several countries. Literature on interlocking directorates is huge and fragmented. Articles in the principal management and sociological journals easily number in the hundred. However, the question that still remains is if interlocking directorates are firm’s strategic choices or derivate phenomenon whose explanation comes from other drivers underestimated in literature.

Design/methodology/approach

At the aim to fill literature gap, the authors realize a longitudinal and cross-national analysis of existing studies on interlocking directorates.

Findings

The authors investigate if existing literature really explains interlocking directorates. Then, the authors offer new perspective for future researches.

Originality/value

The paper offers new perspectives on interlocking directorates’ explanations.

Details

Corporate Governance, vol. 15 no. 4
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 8 June 2012

Michele Simoni and Rosa Caiazza

The prevalent literature considers interlocking directorates as a mechanisms of cooperation among companies, but if the same director seats on the boards of two companies that are

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Abstract

Purpose

The prevalent literature considers interlocking directorates as a mechanisms of cooperation among companies, but if the same director seats on the boards of two companies that are in competition, interlocking directorates, matching cooperation with competition, become a coopetition mechanism. This article aims to argue that the analysis of both the structure and the evolution of interlocking directorates provides some relevant insights on the driving forces behind the coopetition among firms.

Design/methodology/approach

Through a longitudinal study the authors analyzed relations among Italian listed firms belonging to financial or manufacturing sectors and traced the evolution networks of interlocking directorates among them. They then analyzed the coopetitive nature of interlocking directorates among firms acting in the same sector that are in direct competition and their impact on M&A processes.

Findings

It was evidenced that interlocking directorates among firms belonged to the same industry could be considered a coopetitive mechanism if they facilitate formation of deeper relations among competitors such as their integration through M&A.

Originality/value

This article offers a new perspective of analysis in interlocking directorates' field of research.

Details

Corporate Governance: The international journal of business in society, vol. 12 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

Book part
Publication date: 3 July 2018

Ilenia Cecchetti, Veronica Allegrini and Fabio Monteduro

The chapter aims to analyse the influence of the board of directors on transparency and integrity in hybrid organisations like state-owned enterprises. The effect of several…

Abstract

The chapter aims to analyse the influence of the board of directors on transparency and integrity in hybrid organisations like state-owned enterprises. The effect of several characteristics of directors on the board’s effectiveness was assessed. The empirical analysis was based on 60 Italian listed and non-listed state-owned enterprises. Each enterprise’s website was individually examined and coded to obtain two self-constructed indexes on transparency and integrity, and a regression model was created to test the hypotheses.

The ‘knowledge structure’ of interlocking directors and board compensation were found to be both positively related to the level of commitment among state-owned enterprises to transparency and integrity. Skill and gender diversity on the board had no significant impact. The analysis used data from a one-year period but dealt with hidden and complex phenomena like corruption. Future longitudinal studies and qualitative approaches would provide more comprehensive insights into the relationship between the board of directors, transparency and integrity over time.

Policymakers and all those involved in the appointment of directors to state-owned enterprises should be aware that some features of board members may affect the levels of organisational transparency and integrity. The chapter contributes to the literature on governance of state-owned enterprises, emphasising the board’s role and its effectiveness in sustaining transparency and integrity.

Details

Hybridity in the Governance and Delivery of Public Services
Type: Book
ISBN: 978-1-78743-769-2

Keywords

1 – 10 of over 2000