The Effect Of Interlocking Directors Network On Financial Performance Of Listed Companies

With the development of economy and the progress of society,the concept of cooperation between enterprises has changed.More and more enterprises are employing ‘high-quality' ‘external directors' to optimize the structure of the board,so that enterprises acquire better development.This kind of economic phenomenon is formed by the interlocking director who employed in many places,and lead to enterprises establish direct or indirect connected relationship,and then form the social network between enterprises.This network condenses the social capital from the enterprise and individual director,which contains abundant information resources.Therefore,the scholars based on the social network theory and analysis method,explore the effect of interlocking directors network on the corporate performance.However,due to research samples and the economic environment are different,which lead to the diverse influences on the network structure and distribution,and also the corporate performance.Besides the previous research lack of the study of intermediary or adjusting factor.Therefore,in order to better explore the effect of interlocking directors network on financial performance of listed companies,this paper has added the quality of information disclosure as the adjusting factor.This research focus on the effect of the difference ‘position' of enterprises in the interlocking directors network on the financial performance of listed companies,and explore the effect of the relationship between the interlocking directors network and the financial performance of listed companies in the perspective of the quality of information disclosure.This paper chooses the main board of Shenzhen stock market as the research sample and establishes the study interval between the year of 2012 to 2016.After collecting and sorting the data,we construct the ‘Director-Enterprise' matrix according to different year,use the UCINET social network analysis software to generate the network structure diagram between the enterprises,acquire information of the connection status between the sample enterprises,and compute the ‘position' index of the network: degree centrality,closeness centrality and betweenness centrality.The relationship model between the network interlocking directors,the quality of information disclosure and financial performance is established.Finally,the regression test of the research hypothesis was carried out respectively.The test results show that:First,In the network interlocking directors,the center of enterprises is positively correlated with the financial performance.That is,the closer of the enterprise ‘position' in the interlocking director network to the "center",the higher of the enterprise's resource acquisition ability,the stronger competitive advantage in the face of the market competition,and the promotion of the enterprise's financial performance.Second,The quality of information disclosure is positively correlated with the financial performance of listed companies.With the improvement of the quality of information disclosure,it can effectively reduce the ‘information asymmetry' inside and outside of the enterprise,increase the transparency of information,and improve the efficiency of corporate governance,and promote the improvement of corporate financial performance.Third,The quality of information disclosure positively the relationship between the network of interlocking directors and financial performance.That is,when the quality of information disclosure become higher,it strengthens the positive influence on the financial performance of listed companies because of the better position of the enterprise in the interlocking directors network.Finally,according to the empirical test results of the relationship among the interlocking directors network,the quality of information disclosure and the financial performance of listed companies,the paper proposed the policy suggestions to listed companies in our country.And combined with the deficiency in this study prospect the future research direction.