First, let's look at what web site wide links are. After all, if a 2,000 page site has links on half of the pages and a 10 page site has links on every page are both of these truly "site wide"? Well, there are a few ways of getting web site wide links:
1 - asking a favour of another web site owner
2 - providing a template, or being the website designer for the web site
3 - having a connected, maybe a sister, company
If any of these apply, then it is probably true that the search engines would want to ignore the links. But why do people think that site wide links are a problem?
Well, plenty of people will link between their own sites using web site wide links. Some of these have noticed that when the web site wide link is cached by the search engines the results for the recipient site suddenly get lots worse. So the theory starts that these links cause damage to the web site.
But, is there another answer? Usually these people are defensive of their sites and do not publicise their web site adresses. So it is not possible to fully check their theories. As for instance, I read yesterday of a web site owner with 5 sites. One website linked to the other 3 and it was the standalone site that did well in the search engines. When he added that to the links on the first web site, this website also dropped in the results.
However, would a respectable search engine really drop a web site through the rankings just because of web site wide links? I think not, else anyone can destroy any other site's rankings by listing it across their full website. And off website effects are not supposed to negatively impact search engines.
So, what can be happening to these example people? I think it is quite easy. What if the person above, who's main web site he said had a good page rank, had the other site linked to from 1 good page and it was that link that gave the good search engine position? Then, when the website wide links were put in place, rather than just destroying the web site's optimisation the search engines decided to ignore all of the links from that web site?
It is without doubt a possibility and a worring one as a web site designer. Why? Well, like a good artist, I like to sign every website that I create and this gives a link back, regularly from every page of the web site. If web site wide links are not valued, then I am omitted a trick here.
This could mean that side wide links are a problem and something that we need to sort out. Perhaps they are ignored, or possibly people are right and they act negatively, but I very much doubt this. It is difficult to say for sure and something that needs investigating. But, there are very good reasons for them not to give any benefits at the very best.
So this is an investigation that I intend to follow up with a series of experiments. I will be purposely trying to get web sites optimised for 'random' phrases and then seeing if they can be destroyed with web site wide links.