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Small Worlds and Board Interlocking in Brazil: A Longitudinal Study of Corporate Networks, 1997-2007

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  • Wesley Mendes-da-Silva

    (Professor of The Finance, Accounting and Controllership Department of The Fundação Getulio Vargas/Escola de Administração de Empresas de São Paulo)

Abstract

Social Network Analysis (SNA) is an emerging research field in finance, above all in Brazil. This work is pioneering in that it is supported by reference to different areas of knowledge: social network analysis and corporate governance, for dealing with a similarly emerging topic in finance; interlocking boards, the purpose being to check the validity of the small-world model in the Brazilian capital market, and the existence of associations between the positioning of the firm in the network of corporate relationships and its worth. To do so official data relating to more than 400 companies listed in Brazil between 1997 and 2007 were used. The main results obtained suggest that the configuration of the networks of relationships between board members and companies reflects the small-world model. Furthermore, there seems to be a significant relationship between the firm’s centrality and its worth, described according to an “inverted U” curve, which suggests the existence of optimum values of social prominence in the corporate network.

Suggested Citation

  • Wesley Mendes-da-Silva, 2011. "Small Worlds and Board Interlocking in Brazil: A Longitudinal Study of Corporate Networks, 1997-2007," Brazilian Review of Finance, Brazilian Society of Finance, vol. 9(4), pages 465-492.
    • Handle: RePEc:brf:journl:v:9:y:2011:i:4:p:465-492
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    Cited by:

    1. Luciano Rossoni & Cezar Eduardo Aranha & Wesley Mendes-Da-Silva, 2018. "The Complexity of Social Capital: The Influence of Board and Ownership Interlocks on Implied Cost of Capital in an Emerging Market," Complexity, Hindawi, vol. 2018, pages 1-12, February.
    2. Luciano Rossoni & Cezar Eduardo Aranha & Wesley Mendes-Da-Silva, 2018. "Does the capital of social capital matter? Relational resources of the board and the performance of Brazilian companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(1), pages 153-185, March.
    3. Lélis Pedro Andrade & Aureliano Angel Bressan & Robert Aldo Iquiapaza, 2017. "Dual class shares, board of directors’ effectiveness and firm’s market value: an empirical study," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(4), pages 1053-1092, December.
    4. Biswas, Shreya, 2015. "Small World of Inter-firm Network an Firm's Acquisition Behaviour - An Evidence from India," MPRA Paper 67508, University Library of Munich, Germany.
    5. Shreya Biswas, 2016. "Small world of inter-firm network and firm's acquisition behaviour," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2016-003, Indira Gandhi Institute of Development Research, Mumbai, India.
    6. Gavin Smith & Olivia Vila, 2020. "A National Evaluation of State and Territory Roles in Hazard Mitigation: Building Local Capacity to Implement FEMA Hazard Mitigation Assistance Grants," Sustainability, MDPI, vol. 12(23), pages 1-18, November.
    7. Julián Cárdenas, 2019. "Exploring the Relationship between Business Elite Networks and Redistributive Social Policies in Latin American Countries," Sustainability, MDPI, vol. 12(1), pages 1-17, December.

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    More about this item

    Keywords

    Board Interlocking; Social Network Analysis in Finance; Company Boards;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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