An international analysis of CEO social capital and corporate risk‐taking

Stephen P. Ferris, David Javakhadze and Tijana Rajkovic

European Financial Management, 2019, vol. 25, issue 1, 3-37

Abstract: This study examines the effects of CEO social capital on corporate risk‐taking around the world. We document a significant positive relation between CEO social capital and aggregate corporate risk‐taking. Further, we find that CEOs with large social capital prefer riskier investment and financial policies. We also determine that the effect of CEO social capital on corporate risk‐taking is moderated by the extent of legal protections provided to shareholders, the financial development, and the culture of the country in which a firm is incorporated. Our results are robust to alternative proxies of risk‐taking, alternative model specifications, and tests for endogeneity.

Date: 2019
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