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Resources or power?: implications of social networks on compensation and firm performance

Horton, Joanne, Millo, Yuval and Serafeim, George (2012) Resources or power?: implications of social networks on compensation and firm performance. Journal of Business Finance and Accounting, 39 (3-4). pp. 399-426. ISSN 0306-686X

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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: Article
Official URL: http://www.blackwellpublishing.com/journal.asp?ref...
Additional Information: © 2012 Blackwell Publishing Ltd.
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Journal of Economic Literature Classification System: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior
Sets: Departments > Accounting
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 25 Apr 2012 13:28
URL: http://eprints.lse.ac.uk/43327/

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