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

35 Pages Posted: 30 Jan 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: January 2019

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: corporate risk‐taking, social capital, social networks

Suggested Citation

Ferris, Stephen P. and Javakhadze, David and Rajkovic, Tijana, An International Analysis of CEO Social Capital and Corporate Risk‐Taking (January 2019). European Financial Management, Vol. 25, Issue 1, pp. 3-37, 2019, Available at SSRN: https://ssrn.com/abstract=3326051 or http://dx.doi.org/10.1111/eufm.12156

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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