An International Analysis of CEO Social Capital and Corporate Risk-Taking

European Financial Management, 2019, Volume 25, pp. 3-37.

54 Pages Posted: 19 Sep 2017 Last revised: 2 Feb 2019

See all articles by Stephen P. Ferris

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance

David Javakhadze

Florida Atlantic University

Tijana Rajkovic

San Jose State University

Multiple version iconThere are 2 versions of this paper

Date Written: September 14, 2017

Abstract

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.

Keywords: social capital, social networks, corporate risk-taking

JEL Classification: G30, Z13

Suggested Citation

Ferris, Stephen P. and Javakhadze, David and Rajkovic, Tijana, An International Analysis of CEO Social Capital and Corporate Risk-Taking (September 14, 2017). European Financial Management, 2019, Volume 25, pp. 3-37., Available at SSRN: https://ssrn.com/abstract=3037285

Stephen P. Ferris (Contact Author)

University of Missouri at Columbia - Department of Finance ( email )

214 Middlebush Hall
Columbia, MO 65211
United States
573-882-6272 (Phone)
573-884-6296 (Fax)

David Javakhadze

Florida Atlantic University ( email )

College of Busines
777 Glades Road
Boca Raton, FL 33433
United States
561-297-2914 (Phone)

Tijana Rajkovic

San Jose State University ( email )

One Washington Square BT851
San Jose, CA 95192
United States
(408) 924-3467 (Phone)

HOME PAGE: http://www.sjsu.edu/people/tijana.rajkovic/

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