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

Abstract

In this paper we analyze the effects of corporate governance reforms on interlocking directorship, and assess the relationship between interlocking directorships and company value for the main Italian companies listed on the stock exchange over 1998-2007. Using a unique dataset that includes two groups of variables: (i) corporate governance variables related to the board size and the interlocking directorships and (ii) another group of variables related to the economic and financial performance of the companies considered. We find that interlocking directorships are negatively related with company performance with one- or two-year delay, and that the corporate governance reforms introduced over the period considered showed some effectiveness by slightly dispersing the network of companies.

Keywords: Corporate Governance, Interlocking Directorships, Social Network Analysis, Empirical Corporate Finance

JEL Classification: C33, G34, G38, L14