The Japanese Corporate Board Network

We analyze the dynamics of the Japanese board network from 2004 until 2013. We find that the network exhibits some clustering with visible firm conglomerates. Ties between firms are rather persistent, despite noticeable churning among directors. Ownership relations explain only a small fraction of board links. Besides densely connected conglomerates, some tendency of within-sector linkages and linkages to financial institutions can be confirmed. We further investigate the increase in the number of outside directors and find that sectoral differences as well as shareholder characteristics explain to large extend the variation in board composition. The connectivity of firms in the ownership and board network is sometimes related to firm profitability. Firms that are linked to peers with above average profitability are likely also more profitable than firms in other ownership relationships.