{"title":"Social connections, CEO turnover and corporate policy change","authors":"Prabashi Dharmasiri","doi":"10.1177/03128962221126555","DOIUrl":null,"url":null,"abstract":"We examine how social connections between successive CEOs influence policy changes enacted by incoming CEOs. Using forced turnovers, we document fewer policy changes when incoming CEOs are connected to outgoing CEOs. Our results remain consistent when exposed to tests assessing endogeneity concerns such as omitted variables, selection biases and homophily concerns. We find that the reduction in policy changes is more prominent when social ties are stronger due to greater association between the individuals. Analyses further reveal that such limited policy changes enacted by connected incoming CEOs could deteriorate firm performance, highlighting the potential importance of the findings in the CEO selection process. JEL Classification: D91, J63, M12","PeriodicalId":47209,"journal":{"name":"Australian Journal of Management","volume":null,"pages":null},"PeriodicalIF":2.0000,"publicationDate":"2022-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Australian Journal of Management","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.1177/03128962221126555","RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
We examine how social connections between successive CEOs influence policy changes enacted by incoming CEOs. Using forced turnovers, we document fewer policy changes when incoming CEOs are connected to outgoing CEOs. Our results remain consistent when exposed to tests assessing endogeneity concerns such as omitted variables, selection biases and homophily concerns. We find that the reduction in policy changes is more prominent when social ties are stronger due to greater association between the individuals. Analyses further reveal that such limited policy changes enacted by connected incoming CEOs could deteriorate firm performance, highlighting the potential importance of the findings in the CEO selection process. JEL Classification: D91, J63, M12
期刊介绍：
The objectives of the Australian Journal of Management are to encourage and publish research in the field of management. The terms management and research are both broadly defined. The former includes the management of firms, groups, industries, regulatory bodies, government, and other institutions. The latter encompasses both discipline- and problem-based research. Consistent with the policy, the Australian Journal of Management publishes research in accounting, applied economics, finance, industrial relations, political science, psychology, statistics, and other disciplines, provided the application is to management, as well as research in areas such as marketing, corporate strategy, operations management, organisation development, decision analysis, and other problem-focuses paradigms.
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