Santella, Paolo and Drago, Carlo and Polo, Andrea (2007): The Italian Chamber of Lords Sits on Listed Company Boards: An Empirical Analysis of Italian Listed Company Boards from 1998 to 2006.
Download (965kB) | Preview
The purpose of the present paper is to contribute to the literature on country interlocks by illustrating and analysing the interlocking directorships in the Italian listed companies from 1998 to 2006. We find that over the entire period a high percentage of the Italian listed companies are connected with each other through a very small minority of directors. Such group of interlocking (overwhelmingly male) directors shows a remarkable stability over time with very few entrants and very few exits mainly related to the passing away of the director. We define them for brevity the Lords of the Italian stockmarket. Lords tend to belong to families of directors, with the first five families having more than 100 directorships in nine years. The highest level of connectivity concerns those companies that belong to the MIB 30/S&P-MIB 40 index, the Italian Blue Chips. In particular, practically all the financial Blue Chips are connected with each other through a web of directors continuously from 1998 to 2006. The extent, depth, and stability of the connections among the Italian listed companies, and in particular the main Italian financial companies, raise doubts on the extent of their competitive behaviour.
|Item Type:||MPRA Paper|
|Original Title:||The Italian Chamber of Lords Sits on Listed Company Boards: An Empirical Analysis of Italian Listed Company Boards from 1998 to 2006|
|Keywords:||corporate governance, interlocking directorships, board turnover, antitrust, competition, social network analysis (SNA), exploratory data analysis (EDA), empirical corporate finance|
|Subjects:||C - Mathematical and Quantitative Methods > C0 - General
G - Financial Economics > G3 - Corporate Finance and Governance
M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M2 - Business Economics
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance
L - Industrial Organization > L4 - Antitrust Issues and Policies
|Depositing User:||Carlo Drago|
|Date Deposited:||12. Nov 2007 09:14|
|Last Modified:||01. Jun 2015 13:40|
- Aguilera, R.V. (2006). National State Differences and Patterns of Directorship Interlocks: A Comparative Study of Italy and Spain, mimeo, available at http://www.mit.edu/~ecastill/2006seminar/papers/Aguilera2.pdf - Barabasi, A. (2002). Linked, Perseus Publishing, Cambridge, MA. - Barabasi, A. and R. Albert, (1999). Emergence of Scaling in Random Networks, Science vol. 286, p. 509-512 - Barbi, V. (2000). Interlocking Directorship Networks: What is Relevant for the Evolution and Change of the Networks?, Working Paper n. 278, University of Siena - Department of Economics, Available at SSRN: http://ssrn.com/abstract=223543 - Barca, F. and V. Visco (1992). L'economia italiana nella prospettiva europea: terziario protetto e dinamica dei redditi nominali, Roma, Banca d'Italia, Temi di Discussione n. 175. - Barnes, J. A. (1983). Graph Theory in Network Analysis, Social Networks, vol. 5, p. 235-244. - Barucci, E. (2006). Mercato dei capitali e corporate governance in Italia. Carocci editore - Becht, M., P. Bolton and A. Röell (2002). Corporate Governance and Control, October, www.ssrn.com - Bertoni, F. and P.A. Randone (2006). The Small-World of Italian Finance: Ownership Interconnections and Board Interlocks Amongst Italian Listed Companies, available at http://ssrn.com/abstract=917587 - Bhagat, S. and B. Black (1999). The Uncertain Relationship Between Board Composition and Firm Performance, Bus. Law Rev., vol. 54, p. 921. - Bianchi M., M. Bianco and L. Enriques (2002). Pyramidal Groups and the Separation Between Ownership and Control in Italy, in M. Becht and F. Barca, The Control of Corporate Europe, Oxford Scholarship Online Monographs. - Bianchi, M., M. Bianco, S. Giacomelli, A. M. Pacces, and S. Trento (2005). Proprietà e controllo delle imprese in Italia, Bologna, Il Mulino. - Bianchi, M. and M. Bianco (2006), Italian Corporate Governance in the Last 15 Years: From Pyramids to Coalitions?, ECGI - Finance Working Paper No. 144/2006. - Bianco M., and Pagnoni, E. (1997). I Legami Creati tra le Società Quotate dagli Interlocking Directorates: Il Caso delle Banche, Quaderni di Moneta e Credito, Banca Nazionale del Lavoro - Bollobás, B.(1998) Modern Grapg Theory, New York, Springer-Verlag. - Borgatti, S. (2002) Basic Social Network Concepts, AoM PDW Denver. - Borgatti, S., and M. Everett (1999).Models of core/periphery structures, Social Networks, 21, 375- 395. 29 - Borgatti, S.P., M. G. Everett, and L. C. Freeman (2002). Ucinet for Windows: Software for Social Network Analysis, Harvard, MA: Analytic Technologies. - Borgatti, S.P., M.G. Everett, and L.C. Freeman (2002). Ucinet for Windows: Reference Manual - Borsa Italiana (2005). Avviso n. 10349, 4 August, Amendments to the Rules of the Markets and Related Instructions, available at www.borsaitaliana.it - Bron, C. and J. Kerbosch (1973). Finding All Cliques of an Undirected Graph, Comm of the ACM vol. 16, p. 575-577. - Bunting, D. (1976). Corporate Interlocking, part III - Interlocks and Return on Investment, Directors & Boards, vol. 1, p. 4–11. - Burt, R. S. (1976). Position in Networks, Social Forces, vol. 55, p. 93-122. - Burt, R. S. (1983). Corporate Profits and Cooptation, Academic Press, New York. - Caprio, G, L. Laeven, and R. Levine (2006). Governance and Bank Valuation, http://www.econ.brown.edu/fac/Ross_Levine/Publication/Forthcoming/Forth_GC-LLRL_ Govn%20&%20Valuation.pdf - Carbonai D. and G. Di Bartolomeo (2006). Interlocking Directorates as a Thrust Substitute: The Case of the Italian Non-Life Insurance Industry. Department of Communication, Working Paper No. 1 - Carrington, P. J., J. Scott, and S. Wasserman (2005). Models and Methods in Social Network Analysis, Cambridge, Cambridge University Press. - Casaleggio, G. (2004). Il Piccolo Mondo dei CdA Italiani, Milano Finanza, 18 Settembre. - Chabi, S. and J. Maati (2005). Le petit monde du CAC 40, La revue du financier, vol. 153, p. 45-62. - Ciocca, P. (2000). La nuova finanza in Italia, Torino, Bollati Boringhieri. - Ciocca, P. (2007). Ricchi per sempre? Una storia economica d'Italia (1796-2005), Torino, Bollati- Boringhieri. - Cleveland, W.S. (1993). Visualizing Data, Hobart Press, Summit, New Jersey. - Consob (2007). Relazione annuale per il 2006, http://www.consob.it/main/consob/pubblicazioni/relazione_annuale/relazione.html?symblink=/mai n/consob/pubblicazioni/relazione_annuale/index.html - Conyon M.J. and M.R Muldoon (2006). The Small World of Corporate Boards in Singapore, WSRC paper 2006 3/2 Wharton – SMU Research Center. - Corrado R. and M. Zollo (2006). Small Worlds Evolving: Governance Reforms, Privatizations, and Ownership Networks in Italy, Industrial and Corporate Change, Vol. 15, No. 2, pp. 319-352, Available at SSRN: http://ssrn.com/abstract=915137 - Cotter, J., A. Shivdasani, M. Zenner (1997). Do Independent Directors Enhance Target Shareholder Wealth During Tender Offers?, Journal of Financial Economics, vol. 43, p. 195– 218. - Davis, G. F. (1991). Agents Without Principles? The Spread of the Poison Pill Through the Intercorporate Network, Administrative Science Quarterly, vol. 36, p. 583–613. - Davis, G., M. Yoo and W.E.Baker (2003). The Small World of American Corporate Elite, 1982- 2001, Strategic Organization, vol. 3, p. 301-326. 30 - Davis, G., M. Yoo and E.Vast (2003). Le monde toujours plus petit des grandes entreprises américaines, Gérer et Comprendre, December. - Davis, G., M. Yoo, and W.E.Baker (2002). The Network Topography of the American Corporate Elite, 1982-2001, Working Paper, University of Michigan Business School. - De Cecco, M, and G. Ferri (1996). Le banche d’affari in Italia, Bologna, Il Mulino. - De Nooy, W., Mrvar, A., and Batagelj, V. (2005): Exploratory Social Network Analysis with Pajek. New York: Cambridge University Press. - Demsetz, H. (1983). The Structure of Ownership and the Theory of the Firm, Journal of Law and Economics, vol. 26, p. 375-390. - Dooley, P. C. (1969). The Interlocking Directorate, American Economic Review, vol. 59, p. 314– 323. - Doreian, P. (1974). On the Connectivity of Social Networks, Journal of Mathematical Sociology, vol. 3, p. 245-258. - Eckbo, E. (2005). Strong Insiders Invite Weak Governance, Financial Times, May 19. - Elouaer S. (2006) Boardroom Networks Among French Companies: 1996 and 2005, mimeo. - Enriques, L. and M. Volpin (2007). Corporate Governance Reforms in Continental Europe Journal of Economic Perspectives, Vol. 21, No. 1, pp. 117-140, Winter 2007 - Everett M.G., and S.P. Borgatti (1998). Analyzing Clique Overlap, Connections 21(1): 49-61 - Fama, E. and M. Jensen (1985). Organizational Forms and Investment Decisions, Journal of Financial Economics, vol. 14, p. 101-119. - Ferrarini, G. A. (2006). One Share - One Vote: A European Rule? ECGI - Law Working Paper No. 58/2006, also available at www.ssrn.com - Ferri G., D. Masciandaro, and M. Messori (2001). Corporate Governance, Board Turnover and Performance: The Case of Local Banks in Italy, Paolo Baffi Centre Working Paper No. 01-150 - Ferris, S. P., M. Jagannathan, and A. Pritchard (2003). Too Busy to Mind the Business? Monitoring by Directors with Multiple Board Appointments, Journal of Finance, vol. 58, 1087–1111. - Fich E. M. and L. J. White (2005). Why Do CEOs Reciprocally Sit on Each Other’s Boards?, Journal of Corporate Finance, vol. 11, p. 175–195. - Fich, E. M. and A. Shivdasani (2006). Are Busy Boards Effective Monitors?, Journal of Finance, vol. 61, p. 689–724. - Fich, E.M. and L.J. White (2003). CEO Compensation and Turnover: the Effects of Mutually Interlocked Boards. Wake Forest Law Review, vol. 38, p. 935– 959. - Fligstein, N. and P. Brantley (1992). Bank Control, Owner Control, or Organizational Dynamics: Who controls the large modern corporation?, American Journal of Sociology, 98, 280–307. - Ford L R and Fulkerson D R (1956).”Maximum flow through a network” Canadian Journal of Mathematics, 8, 399-404. - Franks, J.R., C. Mayer, and S. Rossi (2004). Spending Less Time with the Family: The Decline of Family Ownership in the UK, ECGI - Finance Working Paper No. 35/2004, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=493504 31 - Freeman, L. (1979). Centrality in Social Networks: A Conceptual Clarification. Social Networks 1: 215-239 - Freeman, L. “Visualizing Social Networks” School of Social Sciences,University of California, Irvine. - Garay U. Gonzàles M. (2005) “CEO and Director Turnover in Venezuela” Working Paper - Granovetter.M. (1973)” The strength of weak ties. “American Journal of Sociology. 81, 1287-1303 - Guieu G., Meschi P.X. (2006) “Conseils d’Administration et Réseaux d’Administrateurs en Europe (2000-2003) : Dynamique et Structure“ Working Paper - Hanneman, R. A. and M. Riddle (2005). Introduction to social network methods. Riverside, CA: University of California, Riverside http://faculty.ucr.edu/~hanneman/ - Harary, F. (1969). “Graph theory” Reading, MA, Addison-Wesley. - Haunschild P.R. Beckman C.M (1998) “When do interlocks matter?: alternate sources of information and interlock influence” Administrative Science Quarterly, Vol. 43, No. 4, pp. 815-844 - Heinze, T. (2004) “Dynamics in the German System of Corporate Governance? Empirical Findings Regarding Interlocking Directorates.” Economy and Society 33:218-238. - Hermalin, B. E. and M. S. Weisbach (1998). Endogeneously Chosen Boards of Directors and their Monitoring of the CEO, American Economic Review, vol. 88, p. 96-118. - Hermalin, B. E. and M. S. Weisbach (2003). Boards of Directors as an Endogeneously Determined Institution: A Survey of the Economic Literature, Working Paper Series, paper 3, Centre for Responsible Business, University of California, Berkeley. - Hopt, K. J. (2004). Board Models in Europe. Recent Developments of Internal Corporate Governance Structures in Germany, the United Kingdom, France, and Italy, ECGI Law Working Paper n. 18/2004. - Jensen, M. and W. M. Meckling (1976). The Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure, Journal of Financial Economics, vol. 3, p. 305-360. - Klein, A. (1998). Firm Productivity and Board Committee Structure, Journal of Law and Economics, vol. 41, p. 137-165. - Krackhardt D., (1994) “Graph Theoretical Dimensions of Informal Organizations”. In Computational Organization Theory. Eds. K.M. Carley & M.J. Prietula. Lawrence Erlbaum Ass.: Hillsdale. - Kramarz, F. and Thesmar, D. (2006) "Social Networks in the Boardroom" (January 2006). IZA Discussion Paper No. 1940 Available at SSRN: http://ssrn.com/abstract=878678 - La Porta, R., F. Lopez-De-Silanes, A. Shleifer, and R. W. Vishny (1998). Law and Finance, Journal of Political Economy, vol. 106, n. 6, p. 1113-1155. - Larcker, D. F., S. A. Richardson, and I. Tuna (2004). How Important is Corporate Governance? mimeo. - Lease, Ronald C., John J. McConnell, and Wayne H. Mikkelson (1984). The Market Value of Differential Voting Rights in Closely Held Corporations, Journal of Business, vol. 57 (4), p. 443-67. 32 - Levine, R. (2004). “The Corporate Governance of Banks: A Concise Discussion of Concepts and Issues.” in Global Corporate Governance Forum Washington, D.C. (www.gcgf.org) and The Certified Accountant, 18, April. - Lorsch, J. and E. MacIver (1989). Pawns or Potentates: The Reality of America’s Corporate Boards, Harvard Business School Press, Boston. - Luce R and Perry A (1949).” A method of matrix analysis of group structure “ Psychometrika 14, 95-116. - Maati J. (2007) “Les administrateur europeens du FTSEurofirst 100 constituent-t-ils un petit monde?” Working paper - Mac Canna L., Brennan N., O’’Higgins (1998) National Networks of Corporate Power: An Irish Perspective, Journal of Management and Governance Volume 2, Number 4, 1998 , pp. 357-379(23) - MacAvoy, P.S. and M. Millstein (1999). The Active Board of Directors and Its Effects on the Performance of the Large Publicly Traded Corporation, Journal of Applied Corporate Finance, vol. 11(4), p. 8-20. - Malagutti, V. (2004). Buconero spa. Dentro il crack Parmalat, Bari-Roma, Laterza. - Malcolm A. (2003), "Boardroom networks among Australian company directors, 1976 and 1996: The impact of investor capitalism", Journal of Sociology, Vol. 39 (3) pp. 231-251 - Malcolm A. (2003), "Boardroom networks among Australian company directors, 1976 and 1996: The impact of investor capitalism", Journal of Sociology, Vol. 39 (3) pp. 231-251 - Mariolis P. 1975. Interlocking directorates and control of corporations: the theory of bank control. Soc. Sci. Q. 56:425–39 - Milgram, S. (1967) “The small world problem” Psychol. Today 2, 60–67 - Millstein, I. M. (1993). The Evolution of the Certifying Board, 48 Bus. Law, p. 1485. - Mintz, B. & M. Schwartz. (1985). “The power structure of American business.” Chicago. University of Chicago Press - Mizruchi MS, Stearns LB. 1988. A longitudinal study of the formation of interlocking directorates. - Mizruchi MS. 1992. The Structure of CorporatePolitical Action. Cambridge: Harvard Univ. Press - Mizruchi, M. S. (1996),What do interlocks do? An analysis, critique, and assessment of research on interlocking directorates, Annual Review of Sociology, 22, 271–298. - Mizruchi, M. S. and L. B. Stearns (1994), A longitudinal study of borrowing by large American corporations, Administrative Science Quarterly, 39, 118–140. - Mokken, R.J. (1979). “Cliques, clubs and clans” Quality and Quantity, 13, 161-173. - Morresi O. (2006) “Performance, proprietà e turnover degli amministratori nel caso italiano” Working paper. - Murgia G. (2006) “L’impatto dell’interlocking sulle imprese del settore IT del Lazio: uno studio basato sulla social network analysis” Working Paper 33 - Newman M. E. J.(2007) “The mathematics of networks” in The New Palgrave Encyclopedia of Economics, 2nd edition, L. E. Blume and S. N. Durlauf (eds.), Palgrave Macmillan, Basingstoke, in press - Newman M.E.J (2003) “The structure and function of complex networks” SIAM Review 45, 167– - Newman, M., S. Strogatz, et D. Watts (2001) : “Random graphs with arbitrary degree distribution and their applications,” Physical Review, 64, p. 1–18. - OECD (2004). Principles of Corporate Governance, www.oecd.org - Ong, Chin Huat, Wan, David and Ong, Kee-Sing (2003) "An Exploratory Study on Interlocking Directorates in Listed Firms in Singapore" . Corporate Governance: An International Review, Vol. 11, pp. 322-334, October 2003 Available at SSRN: http://ssrn.com/abstract=444344 - Ornstein M.(2003) “The Canadian Corporate Network in Comparative Perspective” Comparative Sociology, Brill Academic Publishers - Palmer DA, Jennings PD, Zhou X. 1993. Late adoption of the multidivisional form by large - Parlamento Italiano (2007) Audizione del Presidente dell’Autorità garante della concorrenza e del mercato Antonio Catricalà, presso la Commissione VI Finanze del Senato della Repubblica - Pennings, J. M. (1980), Interlocking Directorates, Jossey-Bass, San Francisco - Pfeffer J, Salancik GR. 1978. The External Controlof Organizations: A Resource Dependence - Pfeffer J. 1972. Size and composition of corporate boards of directors: the organization and its environment. Admin. Sci. Q. 17:218–28 - Phan, P. H., S. H. Lee, and S. C. Lau (2003), The performance impact of interlocking directorates: the case of Singapore, Journal of Managerial Issues, 15, 338–352. - Preda (2002). Codice di autodisciplina delle societa quotate *** - R Development Core Team (2006). R: a language and Environment for Statistical Computing, R Foundation for Statistical Computing, Vienna (Austria). http://www.r-project.org/index.html - R Development Core Team (2006). R: language definition. http://www.r-project.org/ - Radcliff, R. (1980) : “Banks and corporate lending: an analysis of the impact of the internal structure of the capitalist class on the lending behavior of banks,” American Sociological Review, 45, p. 553– 570. - Rajan, R. and L. Zingales (2004). Salvare il capitalismo dai capitalisti, Il Mulino. - Rinaldi A. (2004). Business Elites in Italy: 1913-1972, paper prepared for “Business and Society: the 2004 Conference of the Association of Business Historians”, Nottingham, 25-26 June - Rinaldi A., Vasta M. (2005). The Structure of Italian Capitalism, 1952-1972: New Evidence Using the Interlocking Directorates Technique, Financial History Review, 12.2, 2005, pp. 173-198. - Rodríguez, J.A.; Cárdenas, J.; Oltra, C. (2003) Networks of Economic Power in Europe - Working paper - Rodríguez, J.A.; Cárdenas, J.; Oltra, C. (2003) Redes de poder económico en Europa. Working paper 34 - Roy, W. (1983). “The interlocking directorate structure of the United States”. American Sociological Review, 42, 248-57. - Santella P., Drago C. and Paone G. (2007) "Who Cares About Director Independence?" Available at SSRN: http://ssrn.com/abstract=971189 - Scott, John (2000) “Social Network Analysis: A Handbook”. Second Edition. Sage Publications, London. - Selznick P. 1949. TVA and the Grass Roots. New York: Harper & Row - Selznick P. 1957. Leadership in Administration. New York: Harper & Row - Shleifer, A. and R. Vishny (1997). A Survey of Corporate Governance, Journal of Finance vol. 52, p. 737-783. - Snijders, Tom A. B. (2001) The Statistical Evaluation of Social Network Dynamics. Sociological Methodology 31: 1, 361- - Snijders, Tom A. B. (2003) Models for Longitudinal Network Data. Working Paper - Soon Moon Kang (2006) ”Equicentrality and network centralization: a micro-macro linkage.” Netsci conference 23 may 2006 - Stablein R., Cleland P., Mackie B and Reid D. (2004) “New Zealand exchange limited (nzx) boards and directors: it is a small world after all” Working Paper - StataCorp (2005). Stata Statistical Software: Release 9. College Station, TX: StataCorp LP - Sterman (2000) “Business Dynamics” McGraw Hill - Stokman, F.N. and F.W. Wasseur, (1985). National Networks in 1976: A Structural Comparison, in F.N. Stokman, R. Ziegler and J. Scott (eds.), Networks of Corporate Power: A Comparative Analysis of Ten Countries, Cambridge, U.K.: Polity Press, pp. 20–44. - Stokman, Frans N.; Knoop, Jelle van der; Wasseur, Frans W (1990) Interlocks in the Netherlands: Stability and careers in the period 1960-1980 Published in: The Sociology Of Elites. Volume III: Interlocking Directorships And Corporate Networks - Tufte, E R. (2001).” The Visual Display of Quantitative Information “ 2nd Edition, Cheshire, CT: Graphics Press - Tukey, J. W. (1977). Exploratory Data Analysis. Addison-Wesley - Useem M. 1984. The Inner Circle. New York: Oxford Univ. Press - Vella, F. (2005). Le cooperative e la finanza, www.lavoce.info - Visco, I. (2003). E' veramente in decline l'economia italiana?, in "Aspenia", luglio. - Volpin, P. (2002) “Governance with Poor Investor Protection: Evidence from Top Executive Turnover.” Journal of Financial Economics 64: 61-90. - Wasserman S. and Faust K., (1994), “Social Network Analysis”. Cambridge: Cambridge University Press. - Wassermann S., Faust K., Iacobucci D. (1994) “Social Network Analysis: methods and applications”, Cambridge University Press 35 - Watts D. J. (1999) Small worlds. Princeton University Press, Princeton, New Jersey. - Watts D.J. and Strogatz S.H. (1998) “Collective dynamics of ’small-world ’networks” Nature, 393, pp. 440-442 - Watts, D. J. (1999)” Worlds The Dynamics of Networks Between Order and Randomness” - Watts, D.J (1999): “Networks, dynamics, and the small world phenomenon,” American Journal of Sociology, 105, p. 493–527. - West D.B. (1996). “Introduction to Graph Theory.” Prentice Hall, Upper Saddle River, NJ - Zadra, G. European Banks cross-shareholdings right votes, mimeo - Zajac EJ. 1988. Interlocking directorates as an interorganizational strategy. Acad. Manage. J. 31:428–38 - Zeitlin, M. (1974) : “Corporate Ownership and Control: The Large Corporation and the Capitalist Class,” American Journal of Sociology, 81, p. 894–903.