Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/50720
Authors: 
Kirchmaier, Thomas
Stathopoulos, Konstantinos
Year of Publication: 
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

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