Business Networks and Crisis Performance: Professional, Political, and Family Ties

Richard W. Carney and Travers Barclay Child
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Richard W. Carney: Australian National University, Australia
Travers Barclay Child: VU University Amsterdam, the Netherlands

No 15-135/V, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Previous research on firm performance does not adequately account for the interrelatedness of a firm's professional connections, political ties, and family business-group affiliation. Many widely-cited findings may therefore be subject to confounding bias. To address this problem, we adopt a holistic approach by assembling a new dataset covering professional, political, and family networks for 1,290 large East Asian firms. We find that professional networks buoyed performance during the 2008 financial crisis; political and family networks did not. We provide evidence that information access is a key mechanism underlying the effect of professional networks. A one standard deviation improvement to a firm's professional network position cushioned the fall in quarterly ROA by approximately 35% during the crisis.

Keywords: networks; political connections; interlocking directorates; family ownership; corporate governance (search for similar items in EconPapers)
JEL-codes: G14 G3 L14 (search for similar items in EconPapers)
Date: 2015-12-18, Revised 2015-02-20
New Economics Papers: this item is included in nep-bec, nep-net, nep-sbm, nep-sea, nep-soc and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20150135

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