Managerial Networks and Shareholder Value: Evidence from Sudden Deaths

Item Type	Monograph (Working Paper)
Abstract	This paper investigates the causal effect of connections among top executives and directors of different firms on shareholder value using a quasi-natural experiment. Our identification strategy rests on the idea that sudden deaths trigger unexpected and exogenous dissolutions of connections, which enables us to isolate the value of managerial connections by studying stock price reactions at firms where managers connected to a suddenly deceased manager work. Our results show that firms connected to a suddenly deceased manager experience a statistically significant reduction in shareholder value between 1.6 and 2.6 million USD, which is consistent with the notion that managerial connections foster shareholder value. When exploring the cross-sectional variation, we find evidence that connections to inside directors, connections established via previously shared work engagements, and within-industry connections are most valuable.
Authors	Nielsen, Kirsten Tangaa & von Meyerinck, Felix
Language	English
Keywords	Social networks, Firm value, Sudden death
Subjects	business studies economics finance
HSG Classification	contribution to scientific community
HSG Profile Area	SOF - System-wide Risk in the Financial System
Series Name	School of Finance Working Paper Series
Volume	2018
Number	2018/21
Number of Pages	63
Contact Email Address	felix.meyerinck@unisg.ch
Depositing User	Beatrix Kobelt-Glock
Date Deposited	22 Oct 2018 08:50
Last Modified	20 Jul 2022 17:36
URI:	https://www.alexandria.unisg.ch/publications/255413

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Nielsen, Kirsten Tangaa & von Meyerinck, Felix: Managerial Networks and Shareholder Value: Evidence from Sudden Deaths. School of Finance Working Paper Series, 2018/21.

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https://www.alexandria.unisg.ch/id/eprint/255413

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