Interlocking Directorate and Firm Performance of Listed Companies in Sri Lanka

Farwis, M.; Nazar, M. C. A.

doi:10.5958/2249-7323.2019.00003.8

Cited by 4 publications

(3 citation statements)

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“…On the other hand, Richardson (1987) in Canada, Lincoln et al (1996) in Japan and Fligstein and Brantley (1992) in USA show inverse relation. However, through interlock directorship board gets benefit of experience with risk shrinking behaviour of interlock directors (Hunton & Rose, 2008;Jamal & Bhuiyan, 2015;Farwis & Nazar, 2019). Devos, Prevost and Puthenpurackal (2009) find that poor performing firms are having high interlock and also another study suggests that majority of outside directorship companies have significantly lower the performance (Finch & Shivdasani, 2006).…”

Section: Director Interlocking and Firm Riskmentioning

confidence: 99%

Corporate Board and Firm Risk: An Emerging Market Perspective

Farwis¹,

Nazar²,

Azeez³

2020

IJFR

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This study examines the relationship between board features and firm risk of listed companies in Colombo Stock Exchange for the period of 2010 to 2017. This research was carried out based on positivistic paradigm with the quantitative methodology. Secondary data were collected and analyzed using panel data analyze techniques to obtain quantitative measures of descriptive statistics, correlations, and regression analyses. The results show that the board features variables such as Board size, Women on board, Non-executive director, CEO Duality and Director Interlock have significant impact on firm risk. The results are consistent with agency theory perspective. On the other hand, Audit committee does not show any impact on firm risk in Sri Lankan companies. Our findings reveal that consistence is with theoretical expectation and code best practices. Further, it suggests that as far as the risk is concerned the existing corporate governance practices and code of best practices are effective in Sri Lankan context.

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Section: Director Interlocking and Firm Riskmentioning

confidence: 99%

Corporate Board and Firm Risk: An Emerging Market Perspective

Farwis¹,

Nazar²,

Azeez³

2020

IJFR

Self Cite

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“…In India, a study by Shaw et al (2016) supported the resource dependence view, with highly-connected companies earning higher stock returns. However, the opposite applies in Sri Lanka, which supported the agency theory when director interlock, board size, and CEOs holding a dual role as the chairman of the board decreased company performance (Farwis & Nazar, 2019).…”

Section: Australasian Studiesmentioning

confidence: 91%

“…Some studies found a positive relationship between interlocking and performance, thus supporting the resource dependence theory (Drees & Heugens, 2013), while other studies found a negative relationship, supporting the agency theory (Farwis & Nazar, 2019;Kaczmarek et al, 2014;Roudaki & Bhuiyan, 2015). Some studies also found no relationship, thus supporting neither view (Fligstein & Brantley, 1992;Meeusen & Cuyvers, 1985).…”

Section: Impact Of Interlocking Directoratesmentioning

confidence: 93%

The Properties of Interlocking Directorates in the Philippines: An Exploratory Analysis

2022

RMRJ

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Governance has become an increasingly important factor in the investment decisions of firms and investors. Thus, it is important to determine the quality and composition of corporate boards, which are vital overseers who act in the best interests of shareholders to improve and strengthen them. While interlocking directorates are not a recent occurrence in the Philippines, updated literature on the structure of the country’s board interlock network is sparse. Thus, this study provides a baseline snapshot by analyzing all 251 publicly-listed companies on the Philippine Stock Exchange at the director and board levels. More so, the study utilizes social network analysis tools to describe the properties of interlocking directorates and visually maps out the social network that underpins these relationships. It reveals that the board network is extensive, with almost 90% of firms connected, thanks to a handful of key directors who have high degrees of connectivity.

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