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Three Essays on the Effects of Executives' Informal Networks on Shareholder Value, Financial and Tax Reporting Outcomes

Prior literature suggests that CEOs capitalize on their position within the hierarchy of all business executives, resulting in various – both positive and negative – firm outcomes. Using a novel data set on golf outings to measure the quality of a CEO's informal (vs. formal) network, as measured by the CEO's network centrality, this study examines whether well-connected CEOs generate private gains through insider trades. Results suggest that, among golfing CEOs, CEOs with higher quality informal networks generate significantly higher insider trading profits on sales of their firms' stock, consistent with more famous, powerful, and influential CEOs possessing superior information. The paper continues by delineating a channel through which private information flow to network participants by documenting significantly different golf patterns of CEOs during the two weeks before material firm events become public while showing that CEOs generate noticeably higher insider trading profits from stock trades executed during the two weeks following these golf outings. This study highlights a setting in which shareholders are at risk of wealth transfer and illustrates the potential limitations of regulation concerning insider trading.

Identiferoai:union.ndltd.org:unt.edu/info:ark/67531/metadc1707258
Date08 1900
CreatorsKlaus, Jan Philipp
ContributorsIyer, Govind S., Brown, Jennifer, Pavur, Robert J., Sun, Lili
PublisherUniversity of North Texas
Source SetsUniversity of North Texas
LanguageEnglish
Detected LanguageEnglish
TypeThesis or Dissertation
Formatvii, 83 pages, Text
RightsPublic, Klaus, Jan Philipp, Copyright, Copyright is held by the author, unless otherwise noted. All rights Reserved.

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