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

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Title: More than connectedness : Heterogeneity of CEO social network and firm value
Author: Fang, Yiwei ; Francis, Bill ; Hasan, Iftekhar
Organization: Bank of Finland
Series: Bank of Finland Research Discussion Papers
Series number: 26/2012
Year of publication: 2012
Publication date: 20.8.2012
Pages: 56 s.
Keywords: johtajat; yritykset; verkostot; suhteet; vaikutukset; innovaatiot; investoinnit; USA; verkostoituminen; sosiaaliset taidot
JEL: G32; G30; D71; Z10
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 JEL classification: G32, G30, D71, Z10

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