Interlocking Directorate


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Interlocking Directorate

The relationship that exists between the board of directors of one corporation with that of another due to the fact that a number of members sit on both boards and, therefore, there is a substantial likelihood that neither corporation acts independently of the other.

Because the same persons occupy seats on the boards of companies that are supposed to compete in the marketplace, there is a potential for violations of federal antitrust acts, particularly the Clayton Act (15 U.S.C.A. §§ 12-27 [1914]) which prohibits the existence of inter-locking directorates that substantially reduce commercial competition.

References in periodicals archive ?
The interaction between inter-firm and interlocking directorate networks on firm's new product development outcomes.
This is because, in the context of auditor choice, interlocking directorate is viewed as a connection between the focal board and the auditor appointed in the company of the interlocked board.
1998), and "interlocking directorates" (Dooley, 1969; Ornstein, 1982) have all been used in financial literature to define links between companies via boards of directors.
There have been derivative suits alleging illegal interlocking directorates. In these suits, members of the board of a company are accused of breaching their fiduciary duties by allowing the overlapping directorate in violation of antitrust law.
244-45 (1981) (arguing that the interlocking directorate can "aid
"The Interlocking Directorate." American Economic Review 59: 314-323.
Interlocking directorates also have a learning component.
An interlocking directorate occurs when a person affiliated to one organization sits on the board of directors of another.
Second, I analyze intersectoral relations via a social network analysis of interlocking directorate relations between the fossil fuel sector and the renewables industry, including Crown corporations, renewable industry associations, and climate capitalist civil society organizations.
(Tullett Prebon) and ICAP plc addresses the Departments concerns that the transaction would violate Section 8 of the Clayton Act by creating an interlocking directorate. An interlocking directorate is where one person or an agent of one person or company sits on the board of directors of two competitors.
The typical conceptualization of an interlocking directorate is when two firms share one or more directors.
Additional evidence of the board's role in the determination of corporate strategy may be found in research investigating the diffusion of innovations throughout interlocking directorates. Davis (1991), for example, found that poison pill anti-takeover provisions diffused through the interlocking directorate.