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The Effect of Interlocking Directors Network on Firm Value and Performance: Evidence from Korean-Listed Firms

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  • Hyun-Jung Nam
  • Yohan An

Abstract

This study examines the impact of network of interlocking directors’ network on firm value and performance using panel dataset drawn from 7307 firm-year observations during the period 2000–2014. We conduct social network analysis to analyze the interlocking directors’ network and focus on how interlocking directors’ network and existence of interlocking directors affect firm value and performance. We find that interlocking director network has significant and negative effects on firm values measured as Tobin’s Q and performance measured as return of assets and total factor productivity. This result suggests that the interlocking directors maintain and use vested right to pursue their own interests. It is seen that this can be a chance to impose a symbolic meaning for what kind of effect the interlocking directors make on performance in the Korean-listed firms.

Suggested Citation

  • Hyun-Jung Nam & Yohan An, 2018. "The Effect of Interlocking Directors Network on Firm Value and Performance: Evidence from Korean-Listed Firms," Global Economic Review, Taylor & Francis Journals, vol. 47(2), pages 151-173, April.
    • Handle: RePEc:taf:glecrv:v:47:y:2018:i:2:p:151-173
    DOI: 10.1080/1226508X.2017.1374197
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    Cited by:

    1. Apu Manna & Tarak Nath Sahu & Krishna Dayal Pandey, 2020. "Board size, multiple directorship and performance of Indian listed firms," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 19(2), pages 111-129.
    2. Hua Feng & Zhihong Zhang & Qinglu Wang & Lingyun Yang, 2024. "Does a Company’s Position within the Interlocking Director Network Influence Its ESG Performance?—Empirical Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 16(10), pages 1-29, May.
    3. Mauro Romano & Christian Favino & Luca Pennacchio & Francesco Grimaldi, 2020. "CEO social capital in family businesses and its effect on investment opportunities: Asset or liability?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2004-2015, September.
    4. Chen Chen & David K. Ding & William R. Wilson, 2021. "The Old Boys Club in New Zealand Listed Companies," JRFM, MDPI, vol. 14(8), pages 1-21, July.

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