Corporate governance reforms, interlocking directorship and company performance in Italy

Carlo Drago, Francesco Millo, Roberto Ricciuti and Paolo Santella

International Review of Law and Economics, 2015, vol. 41, issue C, 38-49

Abstract: 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 (search for similar items in EconPapers)
JEL-codes: C33 G34 G38 L14 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Working Paper: Corporate Governance Reforms, Interlocking Directorship and Company Performance in Italy (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:41:y:2015:i:c:p:38-49

DOI: 10.1016/j.irle.2014.09.003

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