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Interlocking directorates and business groups: Belgian evidence

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  • ROMMENS, An
  • CUYVERS, Ludo
  • DELOOF, Marc

Abstract

We investigate the determinants of interlocking directorates and their impact on company performance for a Belgian sample of 286 companies affiliated with a business group and 2,136 stand-alone companies. Most of these companies are not listed. We find that companies belonging to a group have much more interlocking directorates than stand-alone companies. Group companies tend to be strongly interlocked with other group members, including parent companies, and they have more intra-group interlocks when they are located at a higher hierarchical group level. Group companies have more vertical interlocks when they are involved in an internal capital market and when they are affiliated with a diversified business group. We also find that while interlocking directorates are negatively related to the profitability of stand-alone companies, they do not affect the profitability of group companies. This suggests that directors in Belgian business groups are not “too busy”, and that intra-group interlocks are not facilitators of expropriation by controlling shareholders.

Suggested Citation

  • ROMMENS, An & CUYVERS, Ludo & DELOOF, Marc, 2007. "Interlocking directorates and business groups: Belgian evidence," Working Papers 2007023, University of Antwerp, Faculty of Business and Economics.
    • Handle: RePEc:ant:wpaper:2007023
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    Cited by:

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    2. Aylin Ataay, 2016. "Roles of Interlocking Directorates in an Emerging Country: Control and Coordination in Family Business Groups," Eurasian Journal of Business and Management, Eurasian Publications, vol. 4(2), pages 106-116.
    3. Gorodnichenko, Yuriy & Schaefer, Dorothea & Talavera, Oleksandr, 2009. "Financial constraints and continental business groups: Evidence from German Konzerns," Research in International Business and Finance, Elsevier, vol. 23(3), pages 233-242, September.
    4. Juan Antonio Rubio Mondéjar & Josean Garrués Irurzun, 2012. "Estructura corporativa e interlocking directorates en las mayores empresas españolas, 1917-1970," FEG Working Paper Series 01/12, Faculty of Economics and Business (University of Granada).
    5. Guangrui Liu & Hao Qian & Qianqian Wu & Fei Han, 2024. "Research on the masking effect of vertical interlock on ESG greenwashing in the context of sustainable Enterprise development," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 196-209, January.

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