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The economic effect of interlocking directorates in Italy: new evidence using centrality measures

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  • Ettore Croci

    (Catholic University)

  • Rosanna Grassi

    (University of Milan-Bicocca)

Abstract

We use measures of vertex centrality to examine interlocking directorates and their economic effects in Italy. We employ centrality measures like degree, eigenvector centrality, betweenness, and flow betweenness, along with the clustering coefficient. We document the existence of a negative relationship between both degree and eigenvector centrality and firm value. Betweenness and flow betweenness, on the other hand, are not associated with lower firm valuations. We argue that these differences derive from the different properties of these measures: while degree and eigenvector centrality measures the influence and the power of the connections, betweenness and flow betweenness are proxies for the volume of information that passes between the nodes. This result is robust with respect to the use of both stock market and operating performance measures, as well as several controlling variables.

Suggested Citation

  • Ettore Croci & Rosanna Grassi, 2014. "The economic effect of interlocking directorates in Italy: new evidence using centrality measures," Computational and Mathematical Organization Theory, Springer, vol. 20(1), pages 89-112, March.
    • Handle: RePEc:spr:comaot:v:20:y:2014:i:1:d:10.1007_s10588-013-9154-1
    DOI: 10.1007/s10588-013-9154-1
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    Cited by:

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    2. Roy Cerqueti & Giulia Rotundo & Marcel Ausloos, 2021. "Tsallis entropy for cross-shareholding network configurations," Papers 2109.04214, arXiv.org.
    3. Anna Maria D’Arcangelis & Giulia Rotundo, 2016. "Complex Networks in Finance," Lecture Notes in Economics and Mathematical Systems, in: Pasquale Commendatore & Mariano Matilla-García & Luis M. Varela & Jose S. Cánovas (ed.), Complex Networks and Dynamics, pages 209-235, Springer.
    4. Mauro Romano & Christian Favino & Luca Pennacchio & Francesco Grimaldi, 2020. "CEO social capital in family businesses and its effect on investment opportunities: Asset or liability?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2004-2015, September.
    5. Roy Cerqueti & Giulia Rotundo, 2023. "The weighted cross-shareholding complex network: a copula approach to concentration and control in financial markets," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 18(2), pages 213-232, April.
    6. Roy Cerqueti & Giulia Rotundo & Marcel Ausloos, 2018. "Investigating the configurations in cross-shareholding: a joint copula-entropy approach," Papers 1807.09346, arXiv.org.
    7. Sankowska, Anna & Siudak, Dariusz, 2016. "The small world phenomenon and assortative mixing in Polish corporate board and director networks," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 443(C), pages 309-315.
    8. Battaggion, Maria Rosa & Cerasi, Vittoria, 2020. "Strategic interlocking directorates," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 85-101.

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