The influence mechanism of interlocking director network on corporate risk-taking from the perspective of network embeddedness: Evidence from China

Abstract

The interlocking director network can not only help achieve low-cost information sharing and exchange learning among enterprises, but also provide essential resource support for corporate risk-taking behavior. This study aims to empirically analyze the impact, mechanism of action, and boundary of influence of interlocking director network (NET) on corporate risk-taking (RISK) using data of Chinese A-share listed companies from 2007 to 2020.The results show: (1) There is a significant positive correlation between NET and RISK, and the above results are still established after a series of robustness tests. (2) Mechanistic tests show that the NET can promote RISK through two channels: alleviating financing constraints and increasing R&D investment. (3) Further analysis reveals the promotion of NET on RISK is more significant in non-state-owned enterprises and enterprises with higher industry competition intensity. These findings have positive implications for the construction of an inter-enterprise interlocking director network and the enhancement the of the risk-taking level.