Board-CEO friendship ties and firm value: Evidence from US firms

Yaoyao Fan, Agyenim Boateng, Timothy King and Claire MacRae

International Review of Financial Analysis, 2019, vol. 65, issue C

Abstract: This study examines the impact of board-CEO friendship ties on firm value and explores potential channels through which changes in firm value may be conveyed, based on a sample of 1696 publicly listed firms in U.S. over the period of 2000–2014. The study reveals that board-CEO friendship ties have a negative and economically meaningful impact on firm value, as measured by Tobin's Q and Total Q. Regarding potential channels of firm value, we show that the negative influence of board-CEO friendship ties on firm value is reduced in firms with greater board advising requirements but intensified in firms with higher board monitoring needs. We also find social ties tend to destroy firm value whereas professional ties do not. Our results are robust to endogeneity concerns, and after controlling for board-CEO professional ties.

Keywords: Board-CEO friendship ties; Firm value; Agency theory; Directors (search for similar items in EconPapers)
JEL-codes: G30 M41 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S105752191930078X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:65:y:2019:i:c:s105752191930078x

DOI: 10.1016/j.irfa.2019.101373

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().