Executive Network Centrality and Corporate Reporting

• 成果类型: Article
• 署名作者: He, Jing
• 署名单位: University of Delaware
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3924
• 发表日期: 2022
• 页码: 1512-1536
• 关键词: social network centrality; Financial reporting; corporate governance; Managerial labor market

摘要

This paper investigates the association of corporate reporting and executive network centrality, which measures an executive's relative position in a massive network consisting of outside corporate leaders. I find that high-centrality chief executive officers (CEOs) and chief financial officers (CFOs) are generally more likely to engage in financial misreporting than low-centrality CEOs and CFOs. I also find that the influence of CFO network centrality is greater than that of CEOs in financial misreporting. Further analyses show that the monitoring effect of internal governance mechanisms on highcentrality executives is very limited and that the discipline of the managerial labor market is weaker for high-centrality CFOs as well. My results hold for a subsample subject to exogenous shocks to CFO connectedness and are robust to a series of alternative specifications including using CFO fixed effects. Taken together, my findings suggest that corporate reporting can be influenced by executives' social network position, with highcentrality CFOs using their social power to make adverse corporate reporting decisions to gain personal benefits.