Research Discussion Papers, Bank of Finland
No 26/2012:
More than connectedness – Heterogeneity of CEO social network and firm value
Yiwei Fang ()
, Bill Francis ()
and Iftekhar Hasan ()
Abstract: 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.
Keywords: CEO; social networks; corporate finance policy decisions; firm value; (follow links to similar papers)
JEL-Codes: D71; G30; G32; Z10; (follow links to similar papers)
56 pages, August 20, 2012
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