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Herding of Corporate Directors in Taiwan

Author

Listed:
  • John S. Liu
  • Chyan Yang

Abstract

Corporate directors can be said to herd when they sit together on not only one, but several company boards. Such herding is commonly called "multiple interlock" in the literature. This study analyzes the factors involved in director herding using a binary logistics regression model. Statistical analysis indicates that directors who control a large amount of effective assets in the corporate world, own a high percentage of equity in a company, or hold an inside management position are more likely to be involved in multiple firm interlocks. In other words, controlling shareholders and their associates are the main individuals involved in such interlocks. Finally, company financial performance is negatively related to multiple interlocks.

Suggested Citation

  • John S. Liu & Chyan Yang, 2008. "Herding of Corporate Directors in Taiwan," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 44(4), pages 109-123, July.
    • Handle: RePEc:mes:emfitr:v:44:y:2008:i:4:p:109-123
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    Citations

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    Cited by:

    1. Wesley Mendes-da-Silva, 2011. "Small Worlds and Board Interlocking in Brazil: A Longitudinal Study of Corporate Networks, 1997-2007," Brazilian Review of Finance, Brazilian Society of Finance, vol. 9(4), pages 465-492.
    2. Yan-Ting Lin & Shang-Chi Gong & Sou-Shan Wu & Tsung-Pei Lee, 2012. "E/P Mean Reversion-Based Strategies for Investment Practice: Evidence from the Taiwan Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(1), pages 117-131, January.
    3. Li, Bing & Li, Changhong & Wang, Li, 2019. "Does the shareholding network affect bank's risk-taking behavior? An exploratory study on Chinese commercial banks," Finance Research Letters, Elsevier, vol. 31(C).
    4. Ann Ling-Ching Chan & Edward Lee & Jirada Petaibanlue & Ning Tan, 2017. "Do board interlocks motivate voluntary disclosure? Evidence from Taiwan," Review of Quantitative Finance and Accounting, Springer, vol. 48(2), pages 441-466, February.

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