Differences make a difference: Diversity in social learning and value creation
Bill Francis and
Iftekhar Hasan ()
Journal of Corporate Finance, 2018, vol. 48, issue C, 474-491
Prior research has demonstrated that CEOs learn privileged information from their social connections. Going beyond the importance of the number of social ties in a CEO's social network, this paper studies the value generated from a diverse social environment. We construct an index of social-network heterogeneity (SNH) that captures the extent to which CEOs are connected to people of different demographic attributes and skill sets. We find that higher CEO SNH leads to greater firm value through the channels of better corporate innovation and diversified M&As. Overall, the evidence suggests that CEOs' exposure to human diversity enhances social learning and creates greater growth opportunities for firms.
Keywords: Social networks; Human diversity; Firm value (search for similar items in EconPapers)
JEL-codes: L14 J15 J24 G30 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:48:y:2018:i:c:p:474-491
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