Abstract
Social Network Analysis (SNA) is an emerging research field in finance, above all in Brazil. This work is pioneering in that it is supported by reference to different areas of knowledge: social network analysis and corporate governance, for dealing with a similarly emerging topic in finance; interlocking boards, the purpose being to check the validity of the small-world model in the Brazilian capital market, and the existence of associations between the positioning of the firm in the network of corporate relationships and its worth. To do so official data relating to more than 400 companies listed in Brazil between 1997 and 2007 were used. The main results obtained suggest that the configuration of the networks of relationships between board members and companies reflects the small-world model. Furthermore, there seems to be a significant relationship between the firm’s centrality and its worth, described according to an “inverted U” curve, which suggests the existence of optimum values of social prominence in the corporate network.
Highlights
An element of finance literature has assumed that the expansion of the frontiers of this field of knowledge is associated with the development of research, characterized by connected domain approaches, in which it is possible to see the integration of various areas of knowledge
For example, works on behavioral finance and economic sociology stand out. Along this same line of thinking, the corporate governance area has proved to be a fertile field for connected domain research, because it deals with a topic, to the development of which various professionals from different areas have contributed
For the period studied, 1997-2007, the configuration measures of the networks of the board directors and companies listed in Brazil are presented in an evolving way, while at the same time discussing the validity of small worlds within the Brazilian corporate environment
Summary
An element of finance literature has assumed that the expansion of the frontiers of this field of knowledge is associated with the development of research, characterized by connected domain approaches, in which it is possible to see the integration of various areas of knowledge In this context, for example, works on behavioral finance and economic sociology stand out. Since Mills (1956) published The Power Elite, critics have argued that the North American corporate environment can be seen as an insular, politically powerful network of “old boys” According to this logic, the sharing of attributes enables the establishment of ties between board members of the major publicly quoted companies, which begin to configure the network (a set of nodes linked by nodes). This network has been frequently seen as a small-world of mutual knowledge, characterized by the sharing of activities on company boards (board interlocking)
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