Corporate Governance Reforms, Interlocking Directorship and Company Performance in Italy
35 Pages Posted: 12 Oct 2014 Last revised: 17 Jan 2015
Date Written: October 10, 2014
We analyze the effects of corporate governance reforms on interlocking directorship (ID), and we assess the relationship between interlocking directorships and company performance for the main Italian firms listed on the Italian stock exchange over 1998-2007. We use a unique dataset that includes corporate governance variables related to the board size, interlocking directorships and variables related to companies’ performances. The network analysis showed only some effectiveness of these reforms in slightly dispersing the web of companies. Using a diff-in-diff approach, we then find in the period considered a slight reduction in the returns of those companies where interlocking directorships were used the most, which confirms our assumption on the perverse effect of ID on company performance in a context prone to shareholder expropriation such as the Italian one.
Keywords: Corporate Governance, Interlocking Directorships, Social Network Analysis, Empirical Corporate Finance
JEL Classification: C33, G34, G38, L14
Suggested Citation: Suggested Citation