Corporate Governance and the Uncertain Role of Interlocking Directorates:Director Networks in Germany and their Impact on Financial Performance
AbstractThis article deals with interlocking directorates and the increasing attention this topic has been attracting in recent years. Financial theory tends to regard the subject of directorship interlocks generally negative, even if theoretical argumentation also allows speaking favoura-bly of the effects personnel relations have in a firm's perspective. At this point of time, em-pirical findings are contradictory and do not allow making concluding remarks on the impact director ties have on corporate performance. In order to fill this gap, we analyse interlocks between the 30 largest listed German companies from 2001 to 2005 for testing their impact on corporate performance. Our findings indicate that board appointments of executives harm firm performance. However, those interlocks seem to lower managing director compensation of the appointing firm. Interlocks between supervisory board members do not have any influ-ence, neither on financial performance, nor on management payment levels.
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Bibliographic InfoPaper provided by Université de Bourgogne - Leg (laboratoire d'économie et de gestion)/Fargo (Research center in Finance,organizational ARchitecture and GOvernance) in its series Working Papers FARGO with number 1061001.
Length: 26 pages
Date of creation: Oct 2006
Date of revision:
Contact details of provider:
Postal: 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France
Web page: http://leg.u-bourgogne.fr/
Postal: Gérard Charreaux, Fargo-Leg, Université de Bourgogne 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France
Find related papers by JEL classification:
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-14 (All new papers)
- NEP-BEC-2006-10-14 (Business Economics)
- NEP-CFN-2006-10-14 (Corporate Finance)
- NEP-FIN-2006-10-14 (Finance)
- NEP-FMK-2006-10-14 (Financial Markets)
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