The Core of the Global Corporate Network

Ricardo Giglio,Thomas Lux

doi:10.1007/s11067-021-09527-8

Ricardo Giglio, Thomas Lux

Open Access

https://doi.org/10.1007/s11067-021-09527-8

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Abstract

We investigate the network topology of a comprehensive data set of the world-wide population of corporate entities. In particular, we have extracted information on the boards of all companies listed in Bloomberg’s archive of company profiles in October, 2015, a total of almost 100,000 firms. We provide information on board membership overlaps at various levels, and, in particular, show that there exists a core of directors who accumulate a large number of seats and are highly connected among themselves both at the level of national networks and at the worldwide aggregated level.

Highlights

The structure and formation of corporate networks has intrigued researchers from diverse scientific fields and the public in general for a long time
With respect to German board membership data, Milakovicet al. (2010) point out that the pattern of accumulation of board positions by single individuals cannot be plausibly seen as a chance outcome of random draws from the pool of directors for filling the excess of board positions over the number of directors
A number of previous studies have already demonstrated that corporate board and director networks exhibit assortative mixing, proximity to a small-world structure and a high concentration of multiple board memberships that would be highly unlikely to occur by chance under sensible null models for the formation of links in the board network

Summary

Introduction

The structure and formation of corporate networks has intrigued researchers from diverse scientific fields and the public in general for a long time. Corporate governance structures can be cast into the format of a network due to the fact that often members of a corporate board are serving on the boards of two or more companies, generating a network of connections between different companies. This network has been characterized as belonging to the class of small world networks Only a few degrees of personal connections are necessary to transverse the whole network. Some questions naturally arise: Are the network structures the result of purposeful creation of links by some influential elite? Or are they just unintended outcomes from multiple individual and isolated choices? Regardless of the academic discussion, there is a growing public concern that a relatively small group of people have close personal inter-connections while managing/controlling together a large share of the world economy

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