Board-CEO friendship ties and firm value: Evidence from US firms
This study examines the impact of board-CEO friendship ties on firm value and explores potential channels through which changes in firm value may be conveyed, based on a sample of 1,696 publicly listed firms in U.S. over the period of 2000-2014. The study reveals that board-CEO friendship ties have a negative and economically meaningful impact on firm value, as measured by Tobin’s Q and Total Q. Regarding potential channels of firm value, we show that the negative influence of board-CEO friendship ties on firm value is reduced in firms with greater board advising requirements but intensified in firms with higher board monitoring needs. We also find social ties tend to destroy firm value whereas professional ties do not. Our results are robust to endogeneity concerns, and after controlling for board-CEO professional ties.
The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.
Citation : Fan, Y. et al. (2019) Board-CEO friendship ties and firm value: Evidence from US firms. International Review of Financial Analysis, 65, 101373
ISSN : 1057-5219
Research Institute : Finance and Banking Research Group (FiBRe)
Peer Reviewed : Yes