Advertisement

Interlocking directorates in Italy: persistent links in network dynamics

  • Lucia Bellenzier
  • Rosanna GrassiEmail author
Regular Article

Abstract

In this work we study the time evolution of interlocking directorates in Italy from 1998 to 2011 by means of dynamical networks. Our purpose is to assess if in Italy there is a connected and stable structure, due to the presence of directors with multiple mandates, like it happens in the German case. We find a very cohesive network structure, due to the presence of a few directors with multiple assignments and, unlike the German case, this structure is stable, but not connected. Moreover we propose an alternative approach to investigate the dynamics, based on temporal networks, in order to quantify the variation of links in a certain time period. We construct a unique cumulative network, where nodes are companies and the existence of an edge is related with the persistence in time of an interlock between two companies. This persistence is due on the one hand to the ownership of a few family firms, and on the other hand to cross-shareholdings between companies. To complete the analysis we also investigate whether the link stability results from the appointments of the same director or from the stepping in/out of different directors.

Keywords

Interlocking directorates Temporal networks Corporate governance 

JEL Classification

C02 D85 G30 

Notes

Acknowledgments

We thank Gianfranco Gianfrate, Gianfranco Forte and the anonymous referee for their helpful suggestions and comments which really improved the quality of the paper. We also thank Ettore Croci, Massimo Belcredi and Assonime, that kindly provided us with corporate board data from 1998 to 2011.

References

  1. Barabasi A, Reka A (2002) Statistical mechanics of complex networks. Rev Mod Phys 74:47–97CrossRefGoogle Scholar
  2. Barabasi A, Oltvai ZN (2004) Network biology: understanding the cell’s functional organization. Nat Rev Genet 5:101–114CrossRefGoogle Scholar
  3. Battiston S, Catanzaro M (2004) Statistical properties of corporate board and director networks. Eur Phys J B 38(2):345–352CrossRefGoogle Scholar
  4. Bertoni F, Randone P (2006) The small-world of Italian finance: ownership interconnections and board interlocks amongst Italian listed companies (May 1, 2006). Available at SSRN: http://ssrn.com/abstract=917587. doi: 10.2139/ssrn.917587
  5. Bianco M, Pagnoni E (1997) I Legami Creati Tra le Società Quotate dagli Interlocking Directorates: il Caso delle Banche. In Quaderni di Moneta e Credito, Banca Nazionale del LavoroGoogle Scholar
  6. Caldarelli G, Catanzaro M (2004) The corporate boards networks. Phys A 338:98–106CrossRefGoogle Scholar
  7. Carley KM (2003) Dynamic network analysis. In: Breiger R, Carley K, Pattison P (eds) Dynamic social network modeling and analysis: workshop summary and papers, pp 133–145. Committee on Human Factors, National Research Council, National Research Council, Washington, DCGoogle Scholar
  8. Conyon MJ, Muldoon MR (2006) The small world of corporate boards. J Bus Finance Acc 33:1321–1343CrossRefGoogle Scholar
  9. Corrado R, Zollo M (2006) Small worlds evolving: governance reforms. Privatizations, and ownership networks in Italy. Industrial and corporate change, vol 15, pp 319–352Google Scholar
  10. Croci E, Grassi R (2013) The economic effect of interlocking directorates in Italy: new evidence using centrality measures. Comput Math Organ Theory, 1–24. doi: 10.1007/s10588-013-9154-1
  11. Davis GF, Yoo M, Baker WE (2003) The small world of the American corporate Elite, 1982–2001. Strateg Organi 1:301–326. doi: 10.1177/14761270030013002 CrossRefGoogle Scholar
  12. Ferri G, Trento S (1997) La Dirigenza delle Grandi Banche e delle Grandi Imprese: Ricambio e Legami. In Barca F (a cura di) Storia del Capitalismo Italiano, Donzelli, RomaGoogle Scholar
  13. Ferris S, Jagannathan M, Pritchard AC (2003) Too busy to mind the business? Monitoring by directors with multiple board appointments. J Finance 58:1087–1112CrossRefGoogle Scholar
  14. Gambini A, Sarno E, Zazzaro A (2012) Composizione e struttura di rete tra le società quotate in Italia, Mo.Fi.R. Working papers 63, Money and Finance Research Group (Mo.Fi.R.). Deparment of Economic and Social Sciences, Univ. Politecnica MarcheGoogle Scholar
  15. Garlaschelli D, Battiston S, Castri M, Servedio VDP, Caldarelli G (2005) The scale-free topology of market investments. Phys A Stat Mech Appl 350(2–4):491–499CrossRefGoogle Scholar
  16. Harary F (1969) Graph theory. Addison-Wesley, Reading, MAGoogle Scholar
  17. Heemskerk EM (2013) The rise of the european corporate elite: evidence from the network of interlocking directorates in 2005 and 2010. Econ Soc 42(1):74–101CrossRefGoogle Scholar
  18. Holme P, Saramaki J (2012) Temporal networks. airXiv:1108.1780v2Google Scholar
  19. Lahiri M, Berger-Wolf TY (2007) Structure prediction in temporal networks using frequent subgraphs. In: Proceeings of the IEEE CIDM 2007, Honolulu, HawaiiGoogle Scholar
  20. Milaković M, Alfarano S, Lux T (2010) The small core of the German corporate board network. Comput Math Organ Theory 16(2):201–215CrossRefGoogle Scholar
  21. Milaković M, Raddant M, Birg L (2009) Persistence of a network core in the time evolution of interlocking directorates. Economics working papers 2009,10. Department of Economics, Christian-Albrechts-University of KielGoogle Scholar
  22. Mirzuchi MS (1996) What do interlocks do? An analysis, critique, and assessment of research on interlocking directorates. Annu Rev Sociol 22:271–298CrossRefGoogle Scholar
  23. Nicosia V, Tang J, Musolesi M, Russo G, Mascolo C, Latora V (2012) Components in time varying graphs arXiv:1106.2134v3Google Scholar
  24. Non M, Franses P-H (2007) Interlocking boards and firm performance: evidence from a new panel database, TI 2007-034/2. Tinbergen Institute discussion paperGoogle Scholar
  25. Piccardi C, Calatroni L, Bertoni F (2010) Communities in Italian corporate networks. Phys A 389(22):5247–5258CrossRefGoogle Scholar
  26. Rinaldi A, Vasta M (2005) The structure of Italian capitalism, 1952–1972: new evidence using the interlocking directorates technique. Financ Hist Rev 2:173–198CrossRefGoogle Scholar
  27. Rinaldi A, Vasta M (2008) The Italian corporate network, 1952–1983: new evidence using the interlocking directorates technique—RECent: WP n. 24, Università di ModenaGoogle Scholar
  28. Rinaldi A, Vasta M (2009) State-owned enterprises in the Italian corporate network, 1972–1983. Business and economic history on-line, vol 7, pp 1–35Google Scholar
  29. Robins G, Alexander M (2004) Small worlds among interlocking directors: network structure and distance in bipartite graphs. Comput Math Organ Theory 10:69–94CrossRefGoogle Scholar
  30. Rotundo G, D’Arcangelis MA (2010a) Ownership and control in shareholding networks. J Econ Interact Coord 5(2):191–219CrossRefGoogle Scholar
  31. Rotundo G, D’Arcangelis MA (2010b) Network analysis of ownership and control structure in the Italian stock market. Adv Appl Stat Sci 2(2):255–274Google Scholar
  32. Seidman SB (1983) Network structure and minimum degree. Soc Netw 5:269–287CrossRefGoogle Scholar
  33. Santella P, Drago C, Polo A (2009) The Italian Chamber of Lords sits on listed company boards: an empirical analysis of Italian listed company boards from 1998 to 2006 (February 16, 2009). Available at SSRN: http://ssrn.com/abstract=1027947. doi: 10.2139/ssrn.1027947
  34. Santella P, Drago C, Polo A, Gagliardi E (2009) A comparison among the director networks in the main listed companies in France, Germany, Italy, and the United Kingdom. MPRA paper 16397. University Library of Munich, GermanyGoogle Scholar
  35. Stefani S, Torriero A (2013) Formal and informal networks in organizations, Advanced dynamic modeling of economic and social systems. Studies in computational intelligence. Springer, Heidelberg, Germany, pp 61–77Google Scholar
  36. Wasserman S, Faust K (1994) Social network analysis: methods and applications. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  37. Yeo HE, Pochet C, Alcouffe A (2003) CEO Reciprocal Interlocks in French corporations. J Manag Gov 7:87–108CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Department of Statistics and Quantitative MethodsUniversity of Milano-BicoccaMilanItaly

Personalised recommendations