Interlocking Directorates And Corporate Performance

The phenomenon of interlocking directorates has been becoming a new research topic worthy of further discussion, which the Chinese academic circles are faced with. An interlocking directorate refers to the person who has a position in the board of directors of two or more firms at the same time. Firms can establish relationships with each other through interlocking directorates. As the relationship network between firms plays a very significant role in successful business operation, interlocking directorates have become one of the most important forms of it. With the transformation of the economic system and the improvement of modern enterprise system, the phenomenon of interlocking directorates is becoming increasingly popular in Chinese enterprises. In sharp contrast, researches on this issue in the Chinese academic circles are seriously lagging behind.The purpose of this study is to reveal the relationship between interlocking directorates and corporate performance in the context of economic transition in China. It attempts to answer two questions, which includes that what kind of effect interlocking directorates have on corporate performance-positive effect, negative effect or no effect, and whether the change of interlocking directorates and the alteration of corporate performance have dynamic consistency. Therefore, it is conductive to forming a more thorough and comprehensive understanding of the phenomenon of interlocking directorates, and providing some reference for the practice of Chinese corporate governance.On the basis of sufficient theoretical and empirical literature review, this study takes listed companies of A share in China during 2008-2010 as a set of samples. Firstly, it depicts the network structure among these firms by means of UCINET, to learn about the basic status of the samples. Secondly, it makes a statistical analysis of the panel data with the help of EVIEWS, and verifies the positive influence of interlocking directorates on corporate performance. Finally, it takes the alteration of corporate performance as the dependent variable and the change of interlocking directorates as the independent variable, and verifies the dynamic consistency between them by the aid of SPSS.