Interlocking Directorates and Business Groups: Belgian Evidence
AbstractWe investigate the determinants of interlocking directorates and their impact on company performance for a Belgian sample of 286 companies affiliated with a business group and 2,136 stand-alone companies. Most of these companies are not listed. We find that companies belonging to a group have much more interlocking directorates than stand-alone companies. Group companies tend to be strongly interlocked with other group members, including parent companies, and they have more intra-group interlocks when they are located at a higher hierarchical group level. Group companies have more vertical interlocks when they are involved in an internal capital market and when they are affiliated with a diversified business group. We also find that while interlocking directorates are negatively related to the profitability of stand-alone companies, they do not affect the profitability of group companies. This suggests that directors in Belgian business groups are not “too busy”, and that intra-group interlocks are not facilitators of expropriation by controlling shareholders.
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Bibliographic InfoPaper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2007023.
Length: 40 pages
Date of creation: Nov 2007
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-12-15 (All new papers)
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