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

Jung, Nam Hyun; An, Yohan

doi:10.1080/1226508x.2017.1374197

Cited by 20 publications

(21 citation statements)

References 53 publications

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“…So that a phenomenon that occurs in Indonesia, the directors who perform interlock produces an average of the high performance of the company. Therefore, this research does not match Roudaki and Bhuiyan (2015) and Nam and An (2018) with the result that interlock the company and director of a significant negative effect on the performance of the company.…”

Section: Model Regression With Dummy Variablescontrasting

confidence: 60%

“…It was submitted Roudaki and Bhuiyan (2015) that the board of directors will be less attention to the occupied or to prefer other council in the use of time and eventually cause performance degradation on any one company. Research result Non and Franses (2007), Kaczmarek et al (2012) Roudaki and Bhuiyan (2015), and Nam and An (2018) showed negative results between the interlock on the performance of the company.…”

Section: Introductionmentioning

confidence: 94%

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Board Interlocking and Firm Performance: Evidence from Indonesia

Pertiwi

Yulianto

2020

MAJ

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This study aims to determine the relationships of board interlocking and firm performance as measured by Return on Assets (ROA). This research method uses a quantitative approach with research objects of all companies listed on the Indonesia Stock Exchange period 2008-2017. The sample selection method uses a purposive sampling. The sample used was 4450 observation. Data analysis methods used are descriptive analysis and dummy variable regression Analysis of Covariance (ANCOVA). The result showed that the average performance of companies that do interlock of directors at other companies at the same time is higher than companies that do not do interlock. The existence of a director who has do interlock allows directors to get access in other places and can mutually utilize resource supported by empirical result where the total assets of companies that do interlock higher than companies that did not interlock. Although concurrent positions can improve the company, the company still complies with government regulations so that the company does not get the law and get sanctionse.

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Section: Model Regression With Dummy Variablescontrasting

confidence: 60%

Section: Introductionmentioning

confidence: 94%

Board Interlocking and Firm Performance: Evidence from Indonesia

Pertiwi

Yulianto

2020

MAJ

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“…However, personal bonds between companies can also have a negative effect on company performance (Croci & Grassi, 2014). Wellconnected directors can pursue opportunistic behavior (Fich, 2005;Nam & An, 2018;Perry & Peyer, 2005;Rosenstein & Wyatt, 1994) or may need to limit time and resources dedicated to the performance of their duties in each company (Core, Holthausen, & Larcker, 1999;Ferris, Jagannathan, & Pritchard, 2003;Fich & White, 2003;Hallock, 1997). The appointment of directors who are too busy to operate effectively usually translates into weaker control of management, lower company profitability, and limited performance sensitivity (Fich & Shivdasani, 2006).…”

Section: Ceo Network and Firm Performancementioning

confidence: 99%

CEO social capital in family businesses and its effect on investment opportunities: Asset or liability?

Romano

Favino

Pennacchio

et al. 2020

Corp Soc Responsibility Env

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Social capital is a widely recognized critical intangible resource for firm success, especially in family businesses, which are considered “emotional arenas”. CEOs' social capital could represent a decisive factor, although its influence is unclear. This research aims to deepen the relationship between CEOs' social capital and firm investment opportunity set (IOS). The research hypothesis assumes a positive relationship between CEO social capital and firm's IOS. CEO social capital is estimated considering network centrality indicators suggested by the authoritative social network analysis literature. The IOS is represented by a single composite indicator of four price‐based proxies and one accounting variable. Using a wide sample of listed Italian family firms, the analysis shows that a CEO with a broader relational network decreases firm investment opportunities. The findings suggest that family businesses, in the Italian context, lack the environmental conditions and critical factors to valorize the CEO's social capital in terms of future investment opportunities.

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“…In all test models, we use a panel data analysis with fixed effects. Given that heterogeneity exists between corporate governance variables such as ownership structure, industry-year clustering effects should be adjusted (Nam and An, 2018).…”

Section: 21mentioning

confidence: 99%

The effect of ownership-control disparity on the Chinese firm’s real activity earnings management

Kim

An²

2018

PAR

Self Cite

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Purpose This paper aims to investigate the impact of the separation between control and cash flow rights (control-ownership disparity) on the earnings management practices of Chinese firms. The notable features of Chinese firms are those of concentrated ownership and the severe disparity that exists between the control and cash flow rights of controlling shareholders. Design/methodology/approach This study measures the level of Chinese firms’ earnings management by adopting two different methods of measurement: accrual-based earnings management (AEM) and real activity earnings management (REM). The authors also consider the possible trade-off effects between these two types of measurements. The data set in this study encompasses over 2,000 Chinese firms, using data from 2003 to 2015. Findings The results indicate that controlling shareholders are more likely to engage in AEM as their cash flow rights are more concentrated, while they are less likely to use REM as the disparity of control-cash flow rights increases. Further, this inverse relationship between REM and control-cash flow rights disparity becomes more pronounced in the case of a low cash flow rights group. As REM generally causes distortions in firms’ operations, it is possible that the controlling shareholders are more likely to constrain the use of REM as the disparity is perceived to grow. This result may indicate a reduced agency problem between controlling and minority shareholders due to the developing and/or existing ownership dispersions, which are mainly driven by recent reforms applied to Chinese capital markets. However, we do not entirely exclude the possibility of other types of expropriations by the controlling shareholders. It appears that the controlling shareholders are still able to exert a significant level of control, even following a substantial ownership dispersion, and they may seek alternative expropriation methods, including but not limited to intercorporate loan or related party transactions as the disparity of control-cash flow rights increases. Originality/value Although the Chinese economy is experiencing a series of reforms to infuse market forces into capital markets, little has been known about the effects of ownership-control disparity in Chinese firms. Our findings highlight the importance of the country specific context in this vein of research.

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

Cited by 20 publications

References 53 publications

Board Interlocking and Firm Performance: Evidence from Indonesia

Board Interlocking and Firm Performance: Evidence from Indonesia

CEO social capital in family businesses and its effect on investment opportunities: Asset or liability?

The effect of ownership-control disparity on the Chinese firm’s real activity earnings management

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