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Banks’ centrality in corporate interlock networks: evidences in Italy

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  • Farina, Vincenzo

Abstract

The idea that the governance mechanisms affect firms’ performance is well acknowledged in management literature. The settings prevailing in governance studies explain board’s roles at the light of the agency theory framework. However, a complementary perspective is focused on the acquisition of critical resources closely related to activation of external relations with the most influential actors of firm’s environment. One such kind of external relationship is called interlocking directorates and occur when an individual simultaneously sits on the board of two companies. Moreover, since banks control financial capital, that is a resource that has a universal value for all firms, they are more likely to be very important actors inside corporate networks. By analyzing interlocking directorates among listed banks and non financial firms in Italy, using the methods and theory of social network analysis (SNA), I find that banks are the most influential actors in the network and that centrality in the network enhances financial performance.

Suggested Citation

  • Farina, Vincenzo, 2008. "Banks’ centrality in corporate interlock networks: evidences in Italy," MPRA Paper 11698, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:11698
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    File URL: https://mpra.ub.uni-muenchen.de/11698/1/MPRA_paper_11698.pdf
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    7. Almeida, Paul & Dokko, Gina & Rosenkopf, Lori, 2003. "Startup size and the mechanisms of external learning: increasing opportunity and decreasing ability?," Research Policy, Elsevier, vol. 32(2), pages 301-315, February.
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    Cited by:

    1. 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.
    2. Carlo Drago & Roberto Ricciuti & Paolo Santella, 2015. "An Attempt to Disperse the Italian Interlocking Directorship Network: Analyzing the Effects of the 2011 Reform," Working Papers 2015.82, Fondazione Eni Enrico Mattei.
    3. Lucrezia Fattobene & Marco Caiffa & Emiliano Di Carlo, 2018. "Interlocking directorship across Italian listed companies: evidence from a natural experiment," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(2), pages 393-425, June.
    4. François-Xavier Dudouet & Eric Grémont & Antoine Vion, 2014. ""Bank Centrality" and Money Creation [« Centralité bancaire » et émission monétaire]," Working Papers halshs-01095256, HAL.

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    More about this item

    Keywords

    Corporate Governance; Board of Directors; Performance; Social network analysis;

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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