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Resources or power? Implications of social networks on compensation and firm performance
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Horton, Joanne, Millo, Yuval and Serafeim, George (2012) Resources or power? Implications of social networks on compensation and firm performance. Journal of Business Finance & Accounting, 39 (3-4). pp. 399-426. doi:10.1111/j.1468-5957.2011.02276.x
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Official URL: http://dx.doi.org/10.1111/j.1468-5957.2011.02276.x
Abstract
Using a sample of 4,278 listed UK firms, we construct a social network of directorship-interlocks that comprises 31,495 directors. We use social capital theory and techniques developed in social network analysis to measure a director's connectedness and investigate whether this connectedness is associated with their compensation level and their firms overall performance. We find connectedness is positively associated with compensation and with the firm's future performance. The results do not support the view that executive and outside directors use their connections to extract economic rents. Rather the company compensates these individuals for the resources these better connections provide to the firm.
| Item Type: | Journal Article | ||||||
|---|---|---|---|---|---|---|---|
| Divisions: | Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School |
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| Journal or Publication Title: | Journal of Business Finance & Accounting | ||||||
| Publisher: | Wiley-Blackwell Publishing Ltd. | ||||||
| ISSN: | 0306-686X | ||||||
| Official Date: | 1 February 2012 | ||||||
| Dates: |
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| Volume: | 39 | ||||||
| Number: | 3-4 | ||||||
| Page Range: | pp. 399-426 | ||||||
| DOI: | 10.1111/j.1468-5957.2011.02276.x | ||||||
| Status: | Peer Reviewed | ||||||
| Publication Status: | Published | ||||||
| Access rights to Published version: | Restricted or Subscription Access |
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