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More than connectedness – Heterogeneity of CEO social network and firm value

  • Fang, Yiwei

    ()

    (Lally School of Management and Technology, Rensselaer Polytechnic Institute)

  • Francis , Bill

    ()

    (Lally School of Management and Technology, Rensselaer Polytechnic Institute)

  • Hasan, Iftekhar

    ()

    (Fordham University and Bank of Finland Research)

This 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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File URL: http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1226.pdf
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Paper provided by Bank of Finland in its series Research Discussion Papers with number 26/2012.

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Length: 56 pages
Date of creation: 20 Aug 2012
Date of revision:
Handle: RePEc:hhs:bofrdp:2012_026
Contact details of provider: Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
Web page: http://www.suomenpankki.fi/en/

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