Journal
MANAGEMENT SCIENCE
Volume 63, Issue 8, Pages 2420-2438Publisher
INFORMS
DOI: 10.1287/mnsc.2016.2433
Keywords
corporate finance policy decisions; social networks; capital investments
Ask authors/readers for more resources
This paper shows that managers are influenced by their social peers when making corporate policy decisions. Using biographical information about executives and directors of U.S. public companies, we define social ties from current and past employment, education, and other activities. We find that more connections two companies share with each other, more similar their capital investments are. To address endogeneity concerns, we find that companies invest less similarly when an individual connecting them dies. The results extend to other corporate finance policies. Furthermore, central companies in the social network invest in a less idiosyncratic way and exhibit better economic performance.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available