CEO Network Centrality and Merger Performance

El‐Khatib, Rwan; Fogel, Kathy; Jandik, Tomas

doi:10.2139/ssrn.2024484

Cited by 71 publications

(138 citation statements)

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“…Fracassi and Tate () document that CEO–Director social connectedness leads to weaker monitoring and more value‐destroying mergers. El‐Khatib et al () find that centrally positioned CEOs bid more and these merger deals carry greater value losses to the acquirer as well as the combined entity. Due to the inherent endogeneity of valuation in our setting, we leave a more in‐depth analysis of this promising research question to future work.…”

Section: Summary and Discussionmentioning

confidence: 99%

“…First, our study adds to the emerging literature on the effect of social networks on corporate decision‐making. El‐Khatib, Fogel, and Jandik () show that CEOs with higher network centrality measures engage in more and value‐destroying acquisitions. Engelberg et al () document that social connections between banks and borrowers through managerial interpersonal linkages reduce borrowing costs.…”

Section: Introductionmentioning

confidence: 99%

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An international analysis of CEO social capital and corporate risk‐taking

Ferris

Javakhadze

Rajkovic

2017

Euro Fin Management

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This study examines the effects of CEO social capital on corporate risk‐taking around the world. We document a significant positive relation between CEO social capital and aggregate corporate risk‐taking. Further, we find that CEOs with large social capital prefer riskier investment and financial policies. We also determine that the effect of CEO social capital on corporate risk‐taking is moderated by the extent of legal protections provided to shareholders, the financial development, and the culture of the country in which a firm is incorporated. Our results are robust to alternative proxies of risk‐taking, alternative model specifications, and tests for endogeneity.

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Section: Summary and Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

An international analysis of CEO social capital and corporate risk‐taking

Ferris

Javakhadze

Rajkovic

2017

Euro Fin Management

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“…Since networks both enhance reputation benefits (e.g., spread good reviews, create job opportunities) and punish deviance (Burt, ; Brass and Labianca, ), more central managers have both greater ability to communicate and greater incentive to comply with explicit and implicit expectations. Centrality also mitigates the ability of managers to misinform market participants (Fogel, Jandik, and McCumber, ) and lowers the incentive to distort information if the network effects lower performance turnover sensitivity (El‐Khatib et al., ) or increase the likelihood of being hired elsewhere (Liu, ). Thus, ceteris paribus, more central managers are more likely to disclose and to disclose more valuable information that, in turn, may decrease adverse selection and improve stock liquidity.…”

Section: Related Literature and Hypothesis Developmentmentioning

confidence: 99%

Executive Network Centrality and Stock Liquidity

Egginton¹,

McCumber

2018

Financial Management

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We examine the relationship between stock market liquidity and the network centrality of firm executives. We find that firms whose executive officers are more central in the network of executives have narrower bid‐ask spreads. We use an exogenous network centrality shock of executive turnover and report that liquidity improves after firms hire executives with greater centrality. We present evidence that improved liquidity is attributable to efficient information flows around executives in more advantageous network positions.

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“…Table 8, which shows the positive link between powerful independent directors and bidder and total M&A announcement CARs, is subjected to additional robustness checks. The Table 8 regressions include CEO power measures because El-Khatib et al (2013) find that CEOs with high social network centrality supervise value destroying M&A activity. Table 8 is the sole set of results in which CEO power is significant.…”

Section: Robustness Checksmentioning

confidence: 99%