Statistical properties of corporate board and director networks (original) (raw)

The Small World Network Structure of Boards of Directors

2004

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. * Acknowledgments: E-mail conyon@wharton.upenn.edu or M.Muldoon@UMIST.ac.uk with comments. We would like to thank Lori Rosenkopf and seminar participants at Manchester University for comments and discussions during the preparation of this paper. We are grateful to Lerong He for research assistance and to the Reginald Jones Center of the Wharton School for financial support.

Identifying Board of Director Network Influence for Firm Characteristics

SSRN Electronic Journal, 2019

We utilize network analysis to evaluate the relationship between firms' characteristics and board of director networks. In a sample of 20 largest firms by market value from the energy and the utility industrials, 10 from each sector, we cluster the firms by their firm-level characteristics, as well as develop a multiplex network of the firms' board members consisting of two major layers, one for board members' direct connections and another for their indirect connections. Additionally, 4 sub-layers of each major layer of the multiplex network represent corporate, non-profit organization, education and government/military connections between the board members. Each layer of the multiplex network is weighted so that their combined effect can be depicted as a single layered directors' network. The weights of the multiplex directors' network are learned by relating a firm's director network characteristics with the firm cluster characteristics. We observe that director networks display significant connectivity at all multiplex network layers and firms belonging to the same cluster display similar director network characteristics, specifically enhanced by appropriate weighting of director network layers. The optimal value of network sublayer weights are found by optimizing the cohesion of firms in a cluster by their director multiplex network measures.

Networks of corporate power revisited

Procedia - Social and Behavioral Sciences, 2011

This paper examines developments through the quarter century since the publication of Stokman, Ziegler and Scott's (1985) iconic ten-nation study of the structure of interlocking directorships. The surprising decline of research in the area following the publication of Networks of Corporate Power is in part testimony to the rigour of the comparative methods used, raising the standard of evidence required for subsequent director interlock studies. But it also reflected a critical weakness in director interlock research to that point, the limited ability to answer what Mark Mizruchi has called the "So what?" question. While replicated studies found clear structures in director interlocks, varying from country to country, and there was some speculative fit with the distinctive political economies of these countries, there was little evidence of any effect of these structures on firm performance or activity. The more recent resurgence in director interlock research is in some ways rooted in a second generation of the original drivers; the ready availability of now large masses of data on firm governance and firm level performance and further advances in social network analytical techniques. Where Stokman and his colleagues manually compiled lists of directors scoured from company reports, these data are now routinely collected and compiled in accessible databases by government agencies and business information services in many countries. And there has been a gradual accumulation of advances in addressing the "so what" question.

Scale-Free Properties of Board and Director Networks Quantities

Acta Physica Polonica A

It is often claimed that corporate and board networks display a scale-free nature, but there is no robust support for this nature. Based on data concerning the corporate board and director networks from companies listed on the Warsaw Stock Exchange Market, we applied a rigorous approach to determine whether quantities of these networks, such as degree, board size, and directorship number, exhibit power-law distribution.

The Core of the Global Corporate Network

2021

We investigate the network topology of a comprehensive data set of the world-wide population of corporate entities. In particular, we have extracted information on the boards of all companies listed in Bloomberg’s archive of company profiles in October, 2015, a total of almost 100,000 firms. We provide information on board membership overlaps at various levels, and, in particular, show that there exists a core of directors who accumulate a large number of seats and are highly connected among themselves both at the level of national networks and at the worldwide aggregated level.

The Community Structure of the Global Corporate Network

SSRN Electronic Journal, 2000

We investigate the community structure of the global ownership network of transnational corporations. We find a pronounced organization in communities that cannot be explained by randomness. Despite the global character of this network, communities reflect first of all the geographical location of firms, while the industrial sector plays only a marginal role. We also analyze the network in which the nodes are the communities and the links are obtained by aggregating the links among firms belonging to pairs of communities. We analyze the network centrality of the top 50 communities and we provide the first quantitative assessment of the financial sector role in connecting the global economy. community structure of two small networks, the Italian board and ownership networks, the other community analyses have focused on correlation networks in stock markets and in foreign exchange markets .

Corporate Elites and Intercorporate Networks

The SAGE Handbook of Social Network Analysis, edited by John Scott and Peter J. Carrington, 2011

Although systematic network analyses mapping the social organization of business power date only from the 1970s, scholars have explored the relations that link corporations and their directors into corporate elites and intercorporate networks for over a century. Otto Jeidels's (1905) study of the relationship of German banks to industry, the first noteworthy investigation of this kind, discovered 1,350 interlocking directorates between the six biggest banks and industry. He related the interlock network to "a new phase in German industrial development caused by concentration and launched by the economic crisis of 1900" (Fennema and Schijf, 1978: 298). This chapter reviews the empirical work that followed from Jeidels, with an emphasis upon the period since the 1970s, when social scientists turned to network analysis as the primary means of representing the structure of elite and intercorporate relations.

Scale-Free Models for the Structure of Business Firm Networks

We study firm collaborations in the life sciences and the information and communication technology sectors. We propose an approach to characterize industrial leadership using k-shell decomposition, with top-ranking firms in terms of market value in higher k-shell layers. We find that the life sciences industry network consists of three distinct components: a "nucleus," which is a small well-connected subgraph, "tendrils," which are small subgraphs consisting of small degree nodes connected exclusively to the nucleus, and a "bulk body," which consists of the majority of nodes. Industrial leaders, i.e., the largest companies in terms of market value, are in the highest k-shells of both networks. The nucleus of the life sciences sector is very stable: once a firm enters the nucleus, it is likely to stay there for a long time. At the same time we do not observe the above three components in the information and communication technology sector. We also conduct a systematic study of these three components in random scale-free networks. Our results suggest that the sizes of the nucleus and the tendrils in scale-free networks decrease as the exponent of the power-law degree distribution increases, and disappear for Ն3. We compare the k-shell structure of random scale-free model networks with two real-world business firm networks in the life sciences and in the information and communication technology sectors. We argue that the observed behavior of the k-shell structure in the two industries is consistent with the coexistence of both preferential and random agreements in the evolution of industrial networks.

The Network Centrality of Influential Bankers: a new Capital Structure Determinant

2009

This paper studies the impact of the presence of bankers in the board of a corporation on its capital structure. We assume that the presence of bankers reduces information asymmetry problems, facilitating information transmission between corporations and …nancial institutions. Using a large database on Board of Directors, we construct the directors's social network and measure the relative in ‡uence (centrality) of bankers on the information transmission mechanism. Our results indicate the presence of bankers in the board increases the leverage ratio in US. This e¤ect is magni…ed by the in ‡uence of the banker, i.e. the more connected a banker is, the higher the leverage ratio of the …rm in which he or she sits. We also show that he e¤ect of banker's social in ‡uence on the leverage ratio increases with …rm's opacity, which is consistent with our interpretation of the role of bankers on the information transmission mechanism.