Research On The Complex Networks Modeling And Applying Of Interlocking Directorates

Interlocking directorates refers to the social phenomenon that the same directors sit at several different directorates at the same time. The studies before has mainly revealed the reasons for the existence of interlocking directorates, however, they fail to do some research on this phenomenon from the perspective of complex networks. In fact interlocking relationships among different boards of directors and director members have showed network structure with complex network characteristics, such as the small-world and scale-free characteristics. Analyzing the phenomenon of interlocking directorates from the perspective of complex network and doing research on the complex networks modeling and applying of the interlocking directorates are the most important innovation in this thesis. The conclusion of this research will further improve our awareness of phenomenon and networks of interlocking directorates.This thesis obtain some conclusions as follows:1. After a descriptive and statistical analysis of the actual data, this study found that the phenomenon of interlocking directorates exists in 122 companies among the total 142 listed companies. The interlocking directorate coverage ratio reaches 86 percent, while the proportion of interlocking directorates in a single Board of Directors reaches 32.8 percent .All of this verifies the universal existence of interlocking directorates in China.2. According to the empirical data of listed companies in Shanghai 2007, this thesis builds an empirical model and found that the network has a more pronounced scale-free properties. Decompose the networks into interlocking enterprises'networks and the interlocking members'networks derived from the networks and conclude that the complex networks have scale-free nature and clustering. Through the classification of directors, this thesis finds the three interlocking directorates are common in the real world. Through interlocking directorates, enterprises can lock certain resources or ability to obtain the uniqueness of each other's capital to achieve win-win. This is realized mainly through the holding directors and related directors. They create based on their common goal and form the goal-oriented networks, which are usually smaller, more dispersed distribution, but more close contact between members. While independent directors reflects a necessary oversight functions, to comply with legal norms, as well as through their special identity, status, relationship to obtain the necessary hidden income. The independent directors work as a contingency, and randomness ways connecting the various goal-oriented small networks. 3. After making the definition of network- growing rules, we build a theoretical model of complex networks of interlocking directorates through mathematical modeling methods. The network nodes obey power-law distribution, but it suffers the common impacts of the node value and node capital growth potential, which is a significant difference compared to the scale-free BA model; the clustering coefficients runs toward the reciprocal of the average degrees of the network nodes, that is, the clustering coefficients changes with the changes of the networks, which reflects the impacts of changes of interlocking directorates on the clustering of the whole networks; the threshold of dissemination spread value is constant and subject to the initial parameters of the networks ,which reflects a characteristics scale-free network.4. Based on social capital theory and economic theory, this research gives an explanation on reasons for the emergence and existence of interlocking directorates. This thesis thinks that it begins from companies and individuals'decisions weighing their benefits and costs. However, since the formation of interlocking relationship among directors, it begins to carry the flows of information and resources between network nodes, as enterprise or personal contact bridge. This linkage carries significant amount of social capital. The formation of the complex networks of interlocking directorates is accompanied by enterprises and individuals'access to gain social capital.5. Analyzing the impact of complex networks of interlocking directorates on the enterprise. The existence of interlocking directorates can affect the capacity of individual decision-making, while the existence of complex networks of interlocking directorates also brings new problems to the of corporate governance. The enterprises should examine the issue of corporate governance from the complex network perspective, it is necessary to strengthen social supervision by public opinion, to strengthen regulation of the network nodes as well as regulatory control of information transfer between nodes to strengthen corporate governance. Analyzing the application of TOPSIS for group decision-making through the analysis of numerical examples, the board of directors should emphasize the use of group decision-making approach to strengthen the company's overall decision-making capacity and avoid arbitrary decision-making from individuals or small groups to ensure the effectiveness of the company.