Does the Number of Interlocking Directors Influence a Firm’s Financial Performance? An Exploratory Meta-Analysis

Abstract

Many scholars suggest when a firm is connected to other firms by interlocking directors, its financial performance should improve. However, some scholars suggest that when directors have other commitments, this could reduce their abilities to monitor or help their companies. As expected, extant empirical studies have produced mixed results of the relationship. An exploratory meta-analysis of 10 samples (n = 12,519) provided little evidence of a systematic estimate of interlocking directors/ financial performance relationship. Thus, this initial meta-analysis suggests that a mere count of interlocking directors may not have an influence on a firm’s financial performance.