European Business Law Review
Volume 34, Issue 2 (2023) pp. 345 – 376

https://doi.org/10.54648/eulr2023022

Abstract

This empirical, interdisciplinary study explores how interconnected directors of UK companies listed on the London Stock Exchange are. This is the first article to deploy graph theory tools to the directors of all 767 UK companies listed on the LSE’s main market. We find that 550 of these companies are linked by one large daisy chain that arises as a result of the deployment of independent non-executive directors (iNEDs). However, this network is sparse rather than dense –there are approximately 6 directorships needed to link any two directors together. This clarifies the iNED role in corporate governance – they can help combat managerial excesses unique to a company. However, they are inherently linked, and therefore are less likely to be able to push the boundaries of conventional wisdom within corporate governance. An iNED can protect shareholders against shareholder/director agency costs, but only insofar as they are outliers to governance practice.

Extract

To read more, you can buy this article.