Corporate governance in the shipping industry: board interlocks and agency conflicts. Issue 4 (11th July 2019)

• Record Type: Journal Article
• Authors: Andrikopoulos, Andreas; Georgakopoulos, Andreas; Merika, Anna; Merikas, Andreas
• Is Part Of: Corporate governance. Volume 19:Issue 4(2019)
• Page Start: 613
• Page End: 630
• Publication Date: 2019-07-11
• Subjects: Social networks -- Corporate governance -- Interlocking directorates -- Shipping industry; Corporate governance -- Periodicals; 658.4
• DOI: 10.1108/CG-07-2018-0224
• Languages: English
• ISSNs: 1472-0701

Abstract

Abstract : Purpose: This paper aims to explore the effect of interlocking directorates on agency conflicts and corporate performance in the shipping industry. Design/methodology/approach: The authors use social network analysis to discover central nodes in the network of personal and corporate connections in an international sample of 110 listed shipping companies. Findings: Assessing network structure, the authors find that the network of corporate leaders is denser than the network of shipping companies. The network of shipping companies is populated with many isolated nodes; the network of shipping executives and directors is populated with many cohesive groups in which the longest distance between two corporate leaders is two companies. The authors find that interlocking corporate leadership can help resolve agency conflicts in the shipping industry, bearing a negative effect on the magnitude of agency costs. The extent of leadership overlaps is associated with board size, financial leverage and profitability. The relationship between profits and interlocks is bidirectional, implying that interlocking directorates bear a positive effect on asset returns. Originality/value: The authors map the relational structures in the social networks of companies and company leaders in the shipping industry and discover the cross-sectional determinants of interlocks in the shipping industry. The finding about the effect of interlocks on profitability and agency costs bears policy implications for the design of corporate governance in the shipping industry.