Abstract

This paper examines through various channels the effects CEO social network heterogeneity maintains on firm value. We construct four measures of heterogeneity based on demographic attributes, intellectual backgrounds, professional experience, and international exposures of individuals in the CEO social network. We find that CEO social network heterogeneity leads to higher Tobin's Q of firms. Greater CEO social network heterogeneity also leads to: (i) more innovation, (ii) more foreign sales growth, (iii) higher investment sensitivity to Tobin’s Q, and (iv) better M&A performance. Overall, our results indicate that CEO social network heterogeneity is an aspect of CEO social capital and soft skills that deserves the attention of shareholders.

Keywords: Social Networks, Heterogeneity, Intellectual Background, Professional Experience,
International Exposure and Firm Value.