An Exploratory Study on Interlocking Directorates in Listed Firms in Singapore

Abstract

Interlocking directorates is not a recent phenomenon in Singapore. In any country where a substantial proportion of commercial and industrial activities are undertaken by corporations, the importance of the role played by board interlocks should not be ignored. This study examines the structure of interlocking directorates among 295 listed companies in Singapore. The objective is to explore whether firm size, financial connections, debt and corporate performance affect board interlocks. Using ten independent variables, we found that market capitalisation, board size, total assets, return on assets, return on sales, profit before tax and nature of the company (financial or non-financial) are significantly correlated with board interlocks. This lends support to the Bank Control Theory and Resource Dependency Theory. The findings are consistent with those of the United States and Australia.