An Empirical Analysis Of Interlocking Directorates And Company Performance

Interlocking directorates refer to those who serve as board of directors for 2 or more than 2 companies.Interlocking directorates are essential elements for companies to form relationship networks,which are playing a very important role in companies' successful operations.While interlocking directorates network,formed by companies with interlocking directorates,is an important type of inter-organizational relationship network and can utilize its information,knowledge,reputation,influence power to generate great impacts on corporate governance,operation,talent accumulation and performance.Therefore,this dissertation chooses interlocking directorates as the object of study and conducts an empirical analysis on(1)influence factors of interlocking directorates network and(2)interlocking directorates network's impact on company performance,which is of great theoretical and practical significance as for the purpose of improving corporate governance and company performance.To be more specific,this dissertation uses listed companies' data,directors' data and important metrics for interlocking directorates network(i.e.centrality)to make the empirical analysis.Firstly,this dissertation starts from directors' perspective to see whether company size will have an impact on the number of director positions that an interlocking director has.Then,this dissertation uses companies' perspective to delve into the impacts of interlocking directorates' centrality on company performance.This dissertation aims to analyze the mechanism of the establishment of interlocking directorates network and what's the network's influence on company performance.Finally,based on the data of listed companies(excluding financial industry,2005-2014)and interlocking directorates centrality,the empirical analysis finds out that the number of positions that an interlocking director has in different companies is related to the scale of companies,and scale has a positive impact on the number of positions.While degree centrality,betweenness centrality and closeness centrality all have a positive influence on company performance.According to above-mentioned results and findings,this dissertation gives suggestions from perspectives of policy,company and director.For example,regulators can introduce guidance on the maximum number of director positions for each director so that an interlocking director can make his/her basic contribution and fulfill basic responsibility as a company director.In addition,with the rapid development of China's primary market,there're more and more independent directors,appointed by financial investment institutions,showing up in certain companies because these companies have accepted investments from those investment institutions and according to the investment terms,financial investment institutions have the rights to appoint director(s).If several companies become listed with the same person from a financial investment institution acting as independent director,this will result in a comparatively special type of interlocking directorates network,which is a very good topic for further studies on interlocking directorates and company performance to choose.