Productivity, managers’ social connections and the financial crisis

Iftekhar Hasan and Stefano Manfredonia

Journal of Banking & Finance, 2022, vol. 141, issue C

Abstract: This paper investigates whether managers’ personal connections help corporate productivity to recover after a negative economic shock. Leveraging the heterogeneity in the severity of the financial crisis across different sectors, the paper reports that (i) the financial crisis had a negative effect on within-firm productivity, (ii) the effect was long-lasting and persistent, supporting a productivity-hysteresis hypothesis, and (iii) managers’ personal connections allowed corporations to recover from this productivity slowdown. Among the possible mechanisms, we show that connected managers operating in affected sectors foster productivity recovery through higher input cost efficiency and better access to the credit market, as well as more efficient use of labour and capital.

Keywords: Social networks; Financial Crisis; Productivity (search for similar items in EconPapers)
JEL-codes: D24 D85 G30 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:141:y:2022:i:c:s0378426622000942

DOI: 10.1016/j.jbankfin.2022.106497

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