The Small World Network Structure of Boards of Directors

25 Pages Posted: 16 May 2004

See all articles by Martin J. Conyon

Martin J. Conyon

Bentley University; Wharton School, Center for Human Resources

Mark R. Muldoon

University of Manchester - Department of Mathematics

Date Written: May 2004

Abstract

In this paper we present a random graph model to explain the network structure of boards of directors. We investigate the conditions under which corporate boards can be said to be a "small-world". Our empirical results show that the random graph model is remarkably good at explaining board structure and connectedness in the United States, the United Kingdom and Germany. Although there are small-world traits such as "clustering" and "short-paths" in the corporate world, they are no more pronounced than would be expected by chance in a statistically similar, but randomly assembled corporate universe. Finally, our results show the existence of positive degree correlation: directors who sit on many boards do so in the company of other directors who sit on many boards. This result helps explain the distribution of board interlocks.

Keywords: Corporate Governance, small worlds, Board of Directors

Suggested Citation

Conyon, Martin J. and Muldoon, Mark R., The Small World Network Structure of Boards of Directors (May 2004). Available at SSRN: https://ssrn.com/abstract=546963 or http://dx.doi.org/10.2139/ssrn.546963

Martin J. Conyon (Contact Author)

Bentley University ( email )

175 Forest Street
Waltham, MA 02145
United States

Wharton School, Center for Human Resources ( email )

3600 Locust Walk
Philadelphia, PA 19104-6365
United States

Mark R. Muldoon

University of Manchester - Department of Mathematics ( email )

Oxford Road
Manchester M13 9PL, M13 9PL
United Kingdom

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