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

Author

Listed:
  • 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.

Suggested Citation

  • Carlos Drago & Francesco Millo & Roberto Ricciuti & Paolo Santella, 2011. "Corporate Governance Reforms, Interlocking Directorship Networks and Company Value in Italy (1998-2007)," CESifo Working Paper Series 3322, CESifo.
  • Handle: RePEc:ces:ceswps:_3322
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp3322.pdf
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    References listed on IDEAS

    as
    1. Paolo Santella & Carlo Drago & Andrea Polo & Enrico Gagliardi, 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, issue 2, pages 271-288.
    2. Hee-Jung Yeo & Christine Pochet & Alain Alcouffe, 2003. "CEO Reciprocal Interlocks in French Corporations," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 7(1), pages 87-108, March.
    3. Michelacci, Claudio & Schivardi, Fabiano, 2008. "Does Idiosyncratic Business Risk Matter?," CEPR Discussion Papers 6910, C.E.P.R. Discussion Papers.
    4. repec:hrv:faseco:30728041 is not listed on IDEAS
    5. Paolo Santella & Giulia Paone & Carlo Drago, "undated". "How Independent Are Independent Directors? The Case Of Italy," German Working Papers in Law and Economics 2006-1-1148, Berkeley Electronic Press.
    6. Eliezer M. Fich & Anil Shivdasani, 2006. "Are Busy Boards Effective Monitors?," Journal of Finance, American Finance Association, vol. 61(2), pages 689-724, April.
    7. Alexander Dyck & Luigi Zingales, 2004. "Private Benefits of Control: An International Comparison," Journal of Finance, American Finance Association, vol. 59(2), pages 537-600, April.
    8. Hallock, Kevin F., 1997. "Reciprocally Interlocking Boards of Directors and Executive Compensation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 32(3), pages 331-344, September.
    9. 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.
    10. 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.
    11. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    12. Tod Perry & Urs Peyer, 2005. "Board Seat Accumulation by Executives: A Shareholder's Perspective," Journal of Finance, American Finance Association, vol. 60(4), pages 2083-2123, August.
    13. Barker, Roger M., 2010. "Corporate Governance, Competition, and Political Parties: Explaining Corporate Governance Change in Europe," OUP Catalogue, Oxford University Press, number 9780199576814.
    14. Dooley, Peter C, 1969. "The Interlocking Directorate," American Economic Review, American Economic Association, vol. 59(3), pages 314-323, June.
    15. Farina, Vincenzo, 2008. "Banks’ centrality in corporate interlock networks: evidences in Italy," MPRA Paper 11698, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Giovanni Bartolomeo & Paolo Canofari, 2015. "Interlocking Directorates and Concentration in the Italian Insurance Market," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 351-362, December.
    2. Xavier Hollandts & Nicolas Aubert, 2019. "La gouvernance salariale: contribution de la représentation des salariés à la gouvernance d'entreprise," Post-Print hal-01989060, HAL.
    3. Xavier Hollandts & Daniela Borodak & Ariane Tichit, 2018. "La dynamique de changement des formes de gouvernance : le cas français (2000-2014)," Revue Finance Contrôle Stratégie, revues.org, vol. 21(3), pages 129-158, December.
    4. Giovanni Bartolomeo & Paolo Canofari, 2015. "Interlocking Directorates and Concentration in the Italian Insurance Market," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 351-362, December.
    5. 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 10/2011, University of Verona, Department of Economics.
    6. Andrea Fracasso & Valentina Peruzzi & Chiara Tomasi, 2019. "Multiple banking relationships: the role of firm connectedness," DEM Working Papers 2019/3, Department of Economics and Management.
    7. Drago, Carlo & Amidani Aliberti, Livia & Carbonai, Davide, 2014. "Measuring Gender Differences in Information Sharing Using Network Analysis: the Case of the Austrian Interlocking Directorship Network in 2009," Climate Change and Sustainable Development 178241, Fondazione Eni Enrico Mattei (FEEM).
    8. Maria Rosa, Battaggion & Vittoria, Cerasi, 2018. "Endogenous interlocking directorates," Working Papers 380, University of Milano-Bicocca, Department of Economics, revised 01 May 2018.
    9. Su Kun & Liu Heng, 2019. "The Effect of Interlocking Director Network on Corporate Risk Taking: Lessons from China," Entrepreneurship Research Journal, De Gruyter, vol. 9(1), pages 1-21, January.

    More about this item

    Keywords

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

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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