Saturday, 4 June 2016

Anglo Irish Banking crisis in numbers - Report

New data research has shown that shared directorships, or ‘company interlocks’, peaked before Ireland’s banking crisis in 2008. Researchers at the Insight Centre for Data Analytics at UCD, Trinity College Dublin and the University of Washington have developed a statistical model to map the networks of corporate boards in Ireland in the decade between 2003 and 2013. The research reveals that corporate boards in Ireland were at their most ‘interlocked’ just before the economic collapse.

Professor Nial Friel of the Insight Centre for Data Analytics said: ‘Unlike many ingredients of the crash, this is a pattern we can measure. The key ingredient in this work was the development of a statistical model to describe the process of company-director networks over time. But equally importantly, this analysis allowed us to infer whether the level of director interlocking has changed significantly over time. Our model provides many insights, including an intuitive visualisation of the company-director networks.’

Previous research indicates that the presence of the same individuals on multiple boards may have led to groupthink that stifled critical analysis of economic realities.

In 2010, the economic think-tank, TASC, produced a report, ``Mapping the golden circle'', that warned of this effect.

International research on the subject has identified to a number of negative outcomes. Interlocking directorships may be associated with poorer performance and lower value of companies, social embeddedness that limits their effectiveness, excessive remuneration and conflicts of interest, lack of commitment of directors and lack of diversity.

‘Our research shows that interlocking directorship networks have stabilised since the collapse and are still a feature of our corporate governance structures,’ says Professor Friel.

To read the report in full visit