Assessing the meaning of corporate interlocks: Canadian evidence

Abstract

There are good reasons why a great deal of attention has been devoted to the study of directorate interlocks. They provide a means to examine the connections among large firms using data which are relatively accessible in public documents and can be analyzed using computers. Recent developments in the modeling of large networks and the design of software to estimate their parameters and in the assembly of directorate data for large numbers of firms mean that future analysis of these networks can overcome the past limitations to small samples of firms and to simple descriptions of their relationships. Unfortunately these advances do not seem to have been accompanied by a corresponding growth in our knowledge about the nature of the interlocks themselves. There is little systematic information on what sort of connection exists between two firms that share one or more common directors. The presence of the same individual at board meetings of two firms provides one opportunity for these firms to coordinate their activities. But it is certainly easier for the managers of those firms to meet outside the board meetings, if they wish to communicate. Little is known about what goes on at the typical board meeting of a large Canadian firm, about the frequency of meetings, or even about the levels of attendance. Indeed, it is possible to imagine a network built around the prestige levels of the directors, rather than the proximity of the firms on whose boards they serve. 1