Interlocking corporate directorates

Interlocking boards of directors
Overlapping company governance

Nature

Interlocking corporate directorates refer to the practice where individuals serve on the boards of multiple companies simultaneously, creating interconnected relationships among firms. This phenomenon can lead to potential conflicts of interest, reduced competition, and a lack of accountability, as directors may prioritize personal or corporate interests over shareholder welfare. Critics argue that interlocking directorates can facilitate collusion and inhibit innovation, as companies may coordinate strategies rather than compete. Additionally, this practice can undermine corporate governance by concentrating power among a small group of individuals, raising concerns about transparency and the equitable distribution of resources within the market.

Incidence

63% of all outside directors of the Fortune list of 1,000 largest American companies are chief executives of other companies.

Claim

Interlocking corporate directorates pose a significant threat to fair competition and corporate governance. When directors serve on multiple boards, they create a web of influence that undermines accountability and fosters collusion. This practice stifles innovation, concentrates power, and prioritizes the interests of a select few over the broader economy. It is imperative that regulators address this issue to ensure transparency, promote diversity in leadership, and protect the integrity of our markets. The time for action is now!

Counter-claim

Interlocking corporate directorates are often overstated as a significant issue. In reality, these connections foster collaboration and knowledge sharing among companies, driving innovation and efficiency. The notion that they create monopolistic behavior overlooks the competitive nature of markets. Instead of demonizing interlocks, we should recognize their role in enhancing corporate governance and strategic decision-making. Focusing on this as a problem distracts from more pressing economic challenges that truly impact consumers and the marketplace.