More than connectedness – Heterogeneity of CEO social network and firm value
AbstractThis paper examines through various channels the effects of CEO social network heterogeneity on firm value. We construct four measures of heterogeneity based on demographic attributes, intellectual backgrounds, professional experience, and geographical exposures of individuals in the CEO social network. We find that CEO social network heterogeneity leads to higher Tobin's Q of firms. Greater CEO social network heterogeneity also leads to: (i) more innovation, (ii) more foreign sales growth, (iii) higher investment sensitivity to Tobin’s Q, and (iv) better M&A performance. Overall, our results indicate that CEO social network heterogeneity is an aspect of CEO social capital and soft skills that deserves the attention of shareholders.
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Bibliographic InfoPaper provided by Bank of Finland in its series Research Discussion Papers with number 26/2012.
Length: 56 pages
Date of creation: 20 Aug 2012
Date of revision:
CEO; social networks; corporate finance policy decisions; firm value;
Find related papers by JEL classification:
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- Z10 - Other Special Topics - - Cultural Economics - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-11 (All new papers)
- NEP-BEC-2012-11-11 (Business Economics)
- NEP-HME-2012-11-11 (Heterodox Microeconomics)
- NEP-NET-2012-11-11 (Network Economics)
- NEP-SOC-2012-11-11 (Social Norms & Social Capital)
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