Corporations across the world are highly interconnected in a large global network of corporate control. This paper investigates the global board interlock network, covering 400,000 firms linked through 1,700,000 edges representing shared directors between these firms. The main focus is on the concept of centrality, which is used to investigate the embeddedness of firms from a particular country within the global network. The study results in three contributions. First, to the best of our knowledge for the first time we can investigate the topology as well as the concept of centrality in corporate networks at a global scale, allowing for the largest cross-country comparison ever done in interlocking directorates literature. We demonstrate, among other things, extremely similar network topologies, yet large differences between countries when it comes to the relation between economic prominence indicators and firm centrality. Second, we introduce two new metrics that are specifically suitable for comparing the centrality ranking of a partition to that of the full network. Using the notion of centrality persistence we propose to measure the persistence of a partition’s centrality ranking in the full network. In the board interlock network, it allows us to assess the extent to which the footprint of a national network is still present within the global network. Next, the measure of centrality ranking dominance tells us whether a partition (country) is more dominant at the top or the bottom of the centrality ranking of the full (global) network. Finally, comparing these two new measures of persistence and dominance between different countries allows us to classify these countries based the their embeddedness, measured using the relation between the centrality of a country’s firms on the national and the global scale of the board interlock network.
There are also a number of works such as @cite_40 that, using the case of Germany, suggest a negative correlation between firm performance and centrality. In @cite_31 , using data on listed firms in Italy and a comparison with a number of previous works, it is argued that there are certainly significant differences between countries with respect to the correlation of board centrality and economic performance. Furthermore, the causal relationship between the connectedness of boards and the aforementioned consequences is not always clear, see for example the discussion in @cite_0 . In many papers it is left for future work to determine whether there is a causal effect, to study the differences between countries, or to scale up to sufficient data for a fair cross-country comparison. Such a comparison is difficult, because datasets of board interlock networks have different sources, and are frequently based on manually gathered data from annual reports. As a result, studies differ in terms of the number of firms that is studied and the point in time at which the study was done, making it hard to objectively compare results.
@cite_0 @cite_40 @cite_31
1486537057 2097989697 1573737819 2053761479
We use measures of vertex centrality to examine interlocking directorates and their economic effects in Italy. We employ centrality measures like degree, eigenvector centrality, betweenness, and flow betweenness, along with the clustering coefficient. We document the existence of a negative relationship between both degree and eigenvector centrality and firm value. Betweenness and flow betweenness, on the other hand, are not associated with lower firm valuations. We argue that these differences derive from the different properties of these measures: while degree and eigenvector centrality measures the influence and the power of the connections, betweenness and flow betweenness are proxies for the volume of information that passes between the nodes. This result is robust with respect to the use of both stock market and operating performance measures, as well as several controlling variables. 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 are (1) 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. The implications of the intricate pattern of relationships formed by company directors holding positions on multiple corporate boards, or 'interlocking', have long been the subject of speculation and investigation. While this web of inter-firm relationships is no longer regarded as prime facia evidence of collusive activity, a growing body of research on US firms has identified a range of performance effects on firms associated with information flows in these networks. Yet research on the role of director networks and firm performance is far from comprehensive and has largely been limited to the largest US corporates. This paper extends the existing research in this field by drawing together the principal findings to date and testing these in a different national context and with a much larger dataset than used previously. The relationship between director interlocks and corporate performance is examined among 6428 UK firms, those with annual turnover of £100 million or more. Social network and regression analysis is used to detect significant relationships between the pattern of director interlinking and corporate performance. A number of significant relationships are identified, broadly consistent with the US research but some phenomena distinctive to the UK is found, reflecting differences in the structure and sociology of capital markets in the two countries. In particular the role of executive directors is much less significant to the general financial performance of UK firms than to US firms and is more focused on reputational concerns in capital markets. We describe a methodology to examine bipartite relational data structures as exemplified in networks of corporate interlocking. These structures can be represented as bipartite graphs of directors and companies, but direct comparison of empirical datasets is often problematic because graphs have different numbers of nodes and different densities. We compare empirical bipartite graphs to simulated random graph distributions conditional on constraints implicit in the observed datasets. We examine bipartite graphs directly, rather than simply converting them to two 1-mode graphs, allowing investigation of bipartite statistics important to connection redundancy and bipartite connectivity. We introduce a new bipartite clustering coefficient that measures tendencies for localized bipartite cycles. This coefficient can be interpreted as an indicator of inter-company and inter-director closenesss but high levels of bipartite clustering have a cost for long range connectivity. We also investigate degree distributions, path lengths, and counts of localized subgraphs. Using this new approach, we compare global structural properties of US and Australian interlocking company directors. By comparing observed statistics against those from the simulations, we assess how the observed graphs are structured, and make comparisons between them relative to the simulated graph distributions. We conclude that the two networks share many similarities and some differences. Notably, both structures tend to be influenced by the clustering of directors on boards, more than by the accumulation of board seats by individual directorss that shared multiple board memberships (multiple interlocks) are an important feature of both infrastructures, detracting from global connectivity (but more so in the Australian case)s and that company structural power may be relatively more diffuse in the US structure than in Australia.