Director Networks Research Articles

National and international interlocking directorates within Europe: corporate networks within and among fifteen European countries

This article focuses on the structural aspects of interlocking directorate networks within and among fifteen European countries. The results show large quantitative differences in network densities within countries. These differences are strongly and significantly related to the ‘variety of capitalism’ in place. Second, an analysis of the interlocking directorates across country borders reveals a European interlocking directorate network in which different countries take quite different positions. As it turns out, a country's international position is strongly and significantly related to its EU membership duration. Additionally, there are indications of a link between the structure of the interlocking directorate network within a country and how that country is positioned in the international network. Data were collected in 2006 concerning 362 corporations with 6115 board positions in fifteen European countries.

The Management Of Research And Development And The Relevance Of Financial Accounting

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: Batang; font-size: x-small;">This study investigates alternatives to current financial accounting treatment of research and development expenditures in United States public corporations.<span style="mso-spacerun: yes;">  </span>A questionnaire survey was sent to members of the Financial Directors Network of the Industrial Research Institute of America, representing over forty percent of private research and development in the United States.<span style="mso-spacerun: yes;">   </span>Background research and the survey indicate that if the financial reporting of research and development is modified, research and development will increase and a shift from short?term to long?term projects will occur; and finally United States public corporations will more effectively compete in the international markets.</span></p>

US Knows Us in the UK: On Director Networks and CEO Compensation

We analyze the relation between CEO compensation and networks of executive and non-executive directors for all listed UK companies over the period 1996-2007. We examine whether networks are built for reasons of information gathering or for the accumulation of managerial influence. Both indirect networks (enabling directors to collect information) and direct networks (leading to more managerial influence) enable the CEO to obtain higher compensation. Direct networks can harm the efficiency of the remuneration contracting in the sense that the performance sensitivity of compensation is then lower. We find that in companies with strong networks and hence busy boards the directors’ monitoring effectiveness is reduced which leads to higher and less performance-sensitive CEO compensation. Our results suggest that it is important to have the ‘right’ type of network: some networks enable a firm to access valuable information whereas others can lead to strong managerial influence that may come at the detriment of the firm and its shareholders. We confirm that there are marked conflicts of interest when a CEO increases his influence by being a member of board committees (such as the remuneration committee) as we observe that his or her compensation is then significantly higher. We also find that hiring remuneration consultants with sizeable client networks also leads to higher CEO compensation especially for larger firms.

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

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.

Stock Repurchases: Bias Introduced by Omitting Director Networks

Stock Repurchases: Bias Introduced by Omitting Director Networks

Director Networks, Firm Performance, and Shareholder Base

Although often criticized for their inefficiency, director networks are observed in many economies of the world. This raises two questions: What is the empirical effect of director networks on firm performance and what are the determinants of director networks? We empirically examine both issues drawing on a unique dataset covering German firms from 1999 to 2007. We find that network embeddedness negatively affects firm performance. Moreover, while foreign investors actively disentangle the network, German institutional investors foster it. Our findings are consistent with the social class hypothesis arguing that well-connected directors feel more committed to their network than to the firms in which they sit on the board. Our findings have important implications for corporate governance research and the regulation of capital markets.

Boardroom Centrality and Firm Performance

Firms with central boards of directors earn superior risk-adjusted stock returns. A long (short) position in the most (least) central firms earns average annual returns of 4.68%. Firms with central boards also experience higher future return-on-assets growth and more positive analyst forecast errors. Return prediction, return-on-assets growth, and analyst errors are concentrated among high growth opportunity firms or firms confronting adverse circumstances, consistent with boardroom connections mattering most for firms standing to benefit most from information and resources exchanged through boardroom networks. Overall, our results suggest that director networks provide economic benefits that are not immediately reflected in stock prices.

Corporate Ownership Structure and the Value Relevance of Family Executives’ External Directorships

This study examines whether the core agency problems (i.e. the agency problems arising from controlling shareholders) affect investors’ valuation on the external directorate networks of family executives. Using a sample of listed firms in Taiwan, we find that the relationship between family executives’ external directorships and market valuation decreases with the level of the divergence in controlling shareholders’ voting and their cash flow rights. This result implies that outside investors perceive that family executives accept outside board seats for the controlling owners’ self-interest purposes at the expense of minority shareholders when controlling families possess more control than their equity ownership, which exacerbates the entrenchment effect of ownership concentration.

Non-executive directors.

A new professional networking site has been created for the NHS Alliance's non-executive director network (NEDNET). The website uses OnMedica's professional networking platform to provide a secure online environment in which NEDNET members can share information and best practice. The network aims to help non-executive directors find theirpeers, learn from each other and learn about the latest developments. The website can be found at www.medefero.com/nednet.

Modelling the evolution of a bipartite network—Peer referral in interlocking directorates

A central part of relational ties between social actors is constituted by shared affiliations and events. The action of joint participation reinforces personal ties between social actors as well as mutually shared values and norms that in turn perpetuate the patterns of social action that define groups. Therefore the study of bipartite networks is central to social science. Furthermore, the dynamics of these processes suggests that bipartite networks should not be considered static structures but rather be studied over time. In order to model the evolution of bipartite networks empirically we introduce a class of models and a Bayesian inference scheme that extends previous stochastic actor-oriented models for unimodal graphs. Contemporary research on interlocking directorates provides an area of research in which it seems reasonable to apply the model. Specifically, we address the question of how tie formation, i.e. director recruitment, contributes to the structural properties of the interlocking directorate network. For boards of directors on the Stockholm stock exchange we propose that a prolific mechanism in tie formation is that of peer referral. The results indicate that such a mechanism is present, generating multiple interlocks between boards.

Is Busy Really Busy? Board Governance Revisited

We investigate the relationship between firm governance and the board’s position in the social network of directors. Using a sample of 133 German firms over the four-year period from 2003 to 2006, we find that firms with intensely connected supervisory boards (1) are associated with lower firm performance, and (2) pay their executives significantly more. We interpret these results as evidence of poor monitoring in firms with directors who are more embedded in the social network. In both cases, simple measures for busy directors that were used by other studies in the past fail to show any significant pattern. The findings suggest that the quality and structural position of additional board seats may play a bigger role than simply the number of board appointments.

Power and Information: The Effect of Board Networks on Mergers and Acquisitions

Director interlocking is a controversial phenomenon, and many countries have implemented regulation limiting multiple directorships. In contrast, Australian companies and directors are relatively free to develop board networks. This paper extends the research on the effects of interlocking directorships by examining the influence that the board networks have on power and information asymmetry in mergers and acquisitions in Australia. Using a sample of 466 bids between 2000 and 2008, it reveals that the closer bidder and target boards are in the director network the greater the likelihood of deal success, the lower the premium offered, the greater the likelihood of target board approval, and the lower the likelihood of competition from other bidders. These results suggest board networks are used to mitigate information asymmetries. Evidence is presented that board centrality is also related to company power; that is, when the bidding company is substantially more central than the target both target board approval and bid completion are more likely.

The social network of New Zealand directors: An exploratory study

The paper has two primary aims. First, to develop an appropriate network analysis to investigate whether any individual directors comprising the social network of New Zealand company directors is sufficiently connected so as to be in a position to exercise any form of cohesion, control or exertion of power. Second whether any directors could be identified as being in a position of power to take advantage of the network? This paper uses social network analysis to map and measure the structural features and patterns of relationships of the directors of companies listed on the New Zealand stock exchange and alternative exchange. The social network analysis was performed using the social network software Pajek™. The techniques used in the study reveal that the vertices (directors) in the network are moderately connected. The findings suggest that there is a small group of directors who are in a position to exercise cohesion, control and power over the network.

Changing National Business Systems: Corporate Governance and Financing in the Netherlands, 1945–2005

This study traces the evolution of corporate governance and financing structures in the Netherlands during the second half of the twentieth century. A description of Dutch shareholder rights, fi nancing structures, and networks of directors reveals the changes that have occurred in many aspects of the Dutch corporate system over the course of six decades. The case of Royal Ahold illustrates some of the developments that have taken place. Most indicate a transition from a coordinated market economy to a more liberal system. The internationalization of the Dutch economy, which has played an important role in the transition of the system, is reflected in the expansion of Dutch firms beyond the national borders and in the growing number of foreign investors in Dutch fi rms.

Network Dynamics of the Dutch Business Elite

This article investigates the cohesion of the Dutch business elite during the 20th century. First it considers the old boys’ network, where social cohesion builds on shared family and educational background. Second, the board-meeting network of corporate directors in the Netherlands is analysed as an expression of the cohesion of the corporate elite. Unlike most studies on interlocking directorates, this article focuses on the interpersonal perspective of the network instead of the intercorporate perspective. The study finds that social cohesion declined between 1976 and 2001. The meeting network of the Dutch corporate elite has become the realm of brokers rather than a device of social cohesion and social closure. It no longer serves the purpose of creating trust among the corporate elite. As a result, norms of corporate governance have become blurred.

A Comparison of the Director Networks of the Main Listed Companies in France, Germany, Italy, the United Kingdom, and the United States

The purpose of this paper is to contribute to the literature on director interlocks by illustrating and analysing the interlocking directorships among the Italian, French, German, UK and US listed Blue Chips. The comparison of the five countries considered shows that two national models stand out. On the one hand a model made of a high number of companies linked to each other through a small number of shared directors who serve on several company boards at the time (France, Germany, and Italy). On the other hand, in the UK much fewer companies are connected to each other essentially through directors who have no more than two board positions at the time. A case in between is represented by the US, where a high number of companies are connected to each other just like Germany, France, and Italy. However, just like the UK, such connections are made through directors who tend to have just two board positions at the time, a sign that, differently from Italy, Germany, and France, the UK and US networks might not be functional to systemic collusion.

An analysis of corporate board networks in South Africa

In this paper we analyse the networks created from directors sitting on the boards of companies in South Africa. We consider two projections of this network: a director network, in which only directors are present and two directors are linked if they sit together on one or more common boards; and a firm network, in which only firms are present and an edge indicates that the two firms share one or more directors. We describe these networks in terms of the statistical properties that they possess, and compare them to theoretical values obtained under various random network models. The network analysis is the first to be applied to a relatively small emerging economy like South Africa. We find that many of the features previously found to hold for highly-developed countries also apply here, suggesting that corporate networks may be fairly robust to stages of economic development.

Director Networks

Director Networks

Director Networks

Director Networks

Trained to interact: echoes from the Workshop Sul-Americano de Mediação em Museus e Centros de Ciência

The initiatives focusing the professional development of explainers are multiplying around the world, building an informal network of researchers, museums managers and directors, explainers, and regional/continental networks, as THE group, the Thematic Human Interface and Explainers group of Ecsite.The Workshop Sul-Americano de Mediação em Museus e Centros de Ciência e Escola de Mediação em Museus e Centros de Ciência, which took place in Rio de Janeiro in September 2008, was a further important step along this path. We believe it is worthwhile to offer to Jcom readers some of the workshop contributions concerning the training of explainers, to which we added an overview of the general problem presented by Lynn Uyen Tran (Lawrence Hall of Science at the University of California, Berkeley).