ABSTRACT
Traditionally, firms have invited top managers of other corporations or bankers to serve on their boards of directors. Despite some restrictions in the UK Corporate Governance Code, interlocking directorships are still common in listed UK companies. The fact that executive directors also occupy board positions in firms other than their own can create useful connections not just at the personal (director) level but can also be valuable for firms. Through such networks, directors develop and strengthen their personal ties, which may influence boardroom discussions regarding compensation, director nominations, and corporate and board restructuring. Furthermore, the connected directors sometimes form the old-boys club, which is often criticized for inducing collusion between firms. Nevertheless, networks enable directors to gather information about corporate strategies, sector trends, (macro-)economic evolutions, but also about the evolution in executive remuneration, and managerial vacancies in other companies.
