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Corporate Governance Reforms, Interlocking Directorship Networks and Company Value in Italy (1998-2007)

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  • Carlos Drago
  • Francesco Millo
  • Roberto Ricciuti
  • Paolo Santella

Abstract

In this paper we contribute to the literature on the structure of interlocking directorship networks and to the literature on the relationship between corporate governance and performance. We use a unique dataset made of corporate governance variables related to the board size and interlocking directorships of the Italian companies listed in the stock exchange over 1998-2007. We find that the corporate governance reforms introduced over the period considered have shown some effectiveness by slightly dispersing the network of companies. Moreover, we find robust evidence that interlocking directorships has been negatively related with company performance.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-01/cesifo1_wp3322.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3322.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3322

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Keywords: corporate governance; interlocking directorships; company performance; social network analysis;

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References

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  1. Hee-Jung Yeo & Christine Pochet & Alain Alcouffe, 2003. "CEO Reciprocal Interlocks in French Corporations," Journal of Management and Governance, Springer, Springer, vol. 7(1), pages 87-108, March.
  2. Farina, Vincenzo, 2008. "Banks’ centrality in corporate interlock networks: evidences in Italy," MPRA Paper 11698, University Library of Munich, Germany.
  3. Claudio Michelacci & Fabiano Schivardi, 2010. "Does Idiosyncratic Business Risk Matter?," Working Papers CELEG, Dipartimento di Economia e Finanza, LUISS Guido Carli 1002, Dipartimento di Economia e Finanza, LUISS Guido Carli.
  4. Tod Perry & Urs Peyer, 2005. "Board Seat Accumulation by Executives: A Shareholder's Perspective," Journal of Finance, American Finance Association, American Finance Association, vol. 60(4), pages 2083-2123, 08.
  5. Dyck, Alexander & Zingales, Luigi, 2002. "Private Benefits of Control: An International Comparison," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3177, C.E.P.R. Discussion Papers.
  6. Santella, Paolo & Drago, Carlo & Polo, Andrea, 2007. "The Italian Chamber of Lords Sits on Listed Company Boards: An Empirical Analysis of Italian Listed Company Boards from 1998 to 2006," MPRA Paper 2265, University Library of Munich, Germany.
  7. Santella, Paolo & Drago, Carlo & Polo, Andrea & Gagliardi, Enrico, 2009. "A Comparison among the director networks in the main listed companies in France, Germany, Italy, and the United Kingdom," MPRA Paper 16397, University Library of Munich, Germany.
  8. Dooley, Peter C, 1969. "The Interlocking Directorate," American Economic Review, American Economic Association, American Economic Association, vol. 59(3), pages 314-23, June.
  9. Paolo Santella & Giulia Paone & Carlo Drago, . "How Independent Are Independent Directors? The Case Of Italy," German Working Papers in Law and Economics, Berkeley Electronic Press 2006-1-1148, Berkeley Electronic Press.
  10. Barker, Roger M., 2010. "Corporate Governance, Competition, and Political Parties: Explaining Corporate Governance Change in Europe," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199576814, October.
  11. Santella Paolo & Drago Carlo & Polo Andrea & Gagliardi Enrico, 2008. "A Comparison of the Director Networks in the Main Companies Listed in Italy, France and the United Kingdom," L'industria, Società editrice il Mulino, Società editrice il Mulino, issue 2, pages 271-288.
  12. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  13. Eliezer M. Fich & Anil Shivdasani, 2006. "Are Busy Boards Effective Monitors?," Journal of Finance, American Finance Association, American Finance Association, vol. 61(2), pages 689-724, 04.
  14. Hallock, Kevin F., 1997. "Reciprocally Interlocking Boards of Directors and Executive Compensation," Journal of Financial and Quantitative Analysis, Cambridge University Press, Cambridge University Press, vol. 32(03), pages 331-344, September.
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Cited by:
  1. Carlo Drago & Francesco Millo & Roberto Ricciuti & Paolo Satella, 2011. "The Role of Women in the Italian Network of Boards of Directors, 2003-2010," Working Papers, University of Verona, Department of Economics 10/2011, University of Verona, Department of Economics.
  2. Carlo Drago & Livia Amidani Aliberti & Davide Carbonai, 2014. "Measuring Gender Differences in Information Sharing Using Network Analysis: the Case of the Austrian Interlocking Directorship Network in 2009," Working Papers, Fondazione Eni Enrico Mattei 2014.61, Fondazione Eni Enrico Mattei.

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