An interlock between two firms occurs if the firms share one or more directors in their boards of directors. We explore the effect of interlocks on firm performance for 101 large Dutch firms using a large and new panel database. We use five different performance measures, and for each performance measure we design three different panel data models, where we allow the effect of the number of interlocks to be linear, quadratic or square root, either with or without lags. Based on all results we conclude that current interlocks can have a negative effect on future firm performance. We show that this negative effect is jointly established by (1) interlocking directors being too busy and (2) by directors being members of a homogenous upper class group.

Additional Metadata
Keywords firm performance, interlocks
JEL Models with Panel Data (jel C23), Mergers; Acquisitions; Restructuring; Corporate Governance (jel G34), Labor Management Relations; Industrial Jurisprudence (jel J53), Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification (jel Z13)
Persistent URL
Series Tinbergen Institute Discussion Paper Series
Journal Discussion paper / Tinbergen Institute
Non, M.C, & Franses, Ph.H.B.F. (2007). Interlocking Boards and Firm Performance: Evidence from a New Panel Database (No. TI 07-034/2). Discussion paper / Tinbergen Institute. Retrieved from