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 22 Oct 2018 12:23
URI: https://www.alexandria.unisg.ch/publications/255413

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Citation

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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