Publication Type

Journal Article

Version

publishedVersion

Publication Date

7-2021

Abstract

The board of directors plays an important role in implementing corporate governance in the firm, as directors have a fiduciary duty to the firm’s shareholders. The effectiveness of directors is a key determinant of corporate value and they need to bring a range of skills and experience to the boardroom. This skill and experience cannot be developed solely within the firm, and most boards incorporate non-executive directors who are or have been directors of other firms. Current research on the benefits of interlocking directorships is mixed between the claim that they bring outside feedback to the table and open decision makers’ minds, and those who think outside directors are a waste of money and can reduce company performance. This paper investigates the extent of interlocking directorship in New Zealand and how it affects corporate performance. Our findings of largely no significant impact on firm performance are consistent with the management control theory of director interlocks; the exceptions support the class hegemony theory that links interlocking directorship with a negative firm performance.

Keywords

Interlocking directorship, board of directors, company performance, New Zealand

Discipline

Corporate Finance | Finance and Financial Management

Research Areas

Finance

Publication

Journal of Risk and Financial Management

Volume

14

Issue

8

First Page

1

Last Page

21

ISSN

1911-8066

Identifier

10.3390/jrfm14080342

Publisher

MDPI

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Additional URL

https://doi.org/10.3390/jrfm14080342

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