Selective Ties: Common Ownership and the Restructuring of Board Interlocks
Abstract
We examine how common institutional ownership influences the formation of board interlocks. Competing views suggest that common owners may expand or selectively restructure governance networks to enhance monitoring. Using the staggered financial institution mergers during 2001–2010 as our identification strategy, we find that an increase in common ownership reduces overall board interlocks, largely driven by a decline in cross-industry interlocks; however, within-industry interlocks remain largely unaffected by the level of common ownership. The aforementioned effect is stronger in firms with weaker governance and greater managerial ability. Overall, our findings support a focused monitoring perspective, indicating that institutional investors selectively reshape board networks rather than broadly expand them.
Keywords
Common ownership, board interlocks, corporate governance
Conference
- International Conference of Taiwan Finance Association (TFA), Taipei, Taiwan, Jun 2025.
- International Conference for Financial Engineering Association of Taiwan (FeAT), Chiayi, Taiwan, Jun 2025.