Social ties, managerial overconfidence, and investment efficiency

Yong Joo Kang, Ho-Young Lee, Hyun-Young Park and Ju Hyoung Park

Finance Research Letters, 2022, vol. 46, issue PA

Abstract: This study examines the association between the social ties among board members and investment efficiency and whether managerial overconfidence aggravates this association. We find that social ties among directors are negatively associated with investment efficiency and managerial overconfidence aggravates this association. These results suggest that social ties between inside and outside directors weaken board independence, which ultimately has a negative impact on optimal investment decision-making. In addition, stakeholders must effectively monitor managers who are overconfident when board members are socially tied.

Keywords: Board characteristics; Social ties; Investment efficiency; Managerial overconfidence (search for similar items in EconPapers)
JEL-codes: G15 G32 G34 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321003330

DOI: 10.1016/j.frl.2021.102300

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