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Synchronicity and firm interlocks in an emerging market

Khanna, Tarun and Thomas, Catherine (2009) Synchronicity and firm interlocks in an emerging market. Journal of Financial Economics, 92 (2). pp. 182-204. ISSN 0304-405X

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Identification Number: 10.1016/j.jfineco.2008.03.005

Abstract

Stock price synchronicity has been attributed to poor corporate governance and a lack of firm-level transparency. This paper investigates the association between different kinds of firm interlocks, control groups, and synchronicity in Chile. A unique data set containing equity cross-holdings, common individual owners, and director interlocks is used to map out firm ties and control groups. While there is a correlation between synchronicity and share ownership and equity ties, synchronicity is more strongly correlated with interlocking directorates. The presence of share directors is associated with either reduced firm-level transparency or increased correlation in firm fundamentals—due, for example, to joint resource allocation across the firms.

Item Type: Article
Official URL: http://www.journals.elsevier.com/journal-of-financ...
Additional Information: © 2009 Elsevier B.V.
Divisions: Management
Subjects: H Social Sciences > H Social Sciences (General)
JEL classification: G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency; Event Studies
G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets
Sets: Departments > Management
Collections > Economists Online
Date Deposited: 02 May 2013 12:24
Last Modified: 20 Oct 2019 01:22
URI: http://eprints.lse.ac.uk/id/eprint/50007

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