Interlocking Directorates and Firm Performance: Evidence from French Companies

Abstract:     
An interlock between two firms occurs if the firms share one or more directors in their boards of directors. We explore the effect of interlocks on firm performance for a sample of 250 French companies using a large and new panel database. We use two different performance measures (Return On Assets and Tobin's Q).

Based on all findings we conclude that there is a significant association between network position and performance. Based on the way it is linked to other firms in the network, a firm's position in a network has been shown to have effect on the performance of a firm. In other words, we conclude that the firm's performance is a function of the position of a company to others in the whole network. The results suggest that the location of firms in these networks is more important than simply the number of ties.

Keywords: firm performance, interlocks, network position

JEL Classification: C23, J53, G32, G34, Z13

working papers series