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Title:From fiction to fact: The impact of CEO social networks PDF Logo
Authors:Kirchmaier, Thomas
Stathopoulos, Konstantinos
Issue Date:2008
Series/Report no.:Manchester Business School working paper 537
Abstract:This paper investigates the relationship between a CEO's social network, firm identity, and firm performance. There are two competing theories that predict contradictory outcomes. Following social network theory, one would expect a positive relation between social networks and firm performance, while agency theory in general and Bebchuk's managerial power approach in particular predicts a negative relationship between social networks and firm performance. Based on a new and comprehensive measure of CEOs social networks, we observe for 363 non-financial firms in the UK that the size of a CEO's social network affects firm performance negatively. Even so, growth companies are actively seeking CEOs with a large social network, which is in line with the social network theory. Still, we find evidence in support of the argument that well-connected CEOs use the power they obtain through their social network to the detriment of shareholders.
Subjects:CEO, boards of directors
social network
accounting performance
JEL:G34
L25
Z13
Document Type:Working Paper
Appears in Collections:Manchester Business School Working Paper Series, The University of Manchester

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