Director interlocking in Australia

Dane Etheridge

Research output: ThesisDoctoral Thesis

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Abstract

This thesis provides a detailed examination of the patterns and consequences of board networks among Australian Securities Exchange listed companies between the years 2000 and 2007. The first contribution this thesis makes is the documentation of major characteristics of director interlocking in Australia. The thesis reveals that financial companies maintain more interlocks than other industries, many of which are with other financial companies. It also documents that the extent to which a company is interlocked is directly related to its size, and that most interlocks occur between companies headquartered in the same state. The thesis applies the graph theory technique ‘small world analysis’ to show that the patterns observed are difficult to be explained by chance. A second contribution of this thesis is the investigation of the effect that director interlocking has on company governance, outcomes and actions. Interlocking is controversial; with some claiming it has negative effects on governance, while others claim they are beneficial. This thesis shows that the extent to which a company is interlocked is not related to structural governance characteristics. Further, no direct relationship is found between board networks and company financial performance.. Particular attention is paid to the effects of board networks on mergers and acquisitions. The extent to which bidders are interlocked is related to several bid characteristics and announcement returns, as is the distance between bidder and target in the board network. Many theories offered to explain board networks are either built on assumptions or make predictions regarding the distribution of power among companies.
Original languageEnglish
QualificationDoctor of Philosophy
Publication statusUnpublished - 2012

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