In contemporary corporate finance there is a growing emphasis on the individual attributes of the CEO and the influence these exerts on corporate policy and behavior. The behavioral corporate finance literature has shown that CEOs’ behavioral biases and traits (e.g. overconfidence, optimism, and risk tolerance) have significant impact on corporate decisions such as investment decisions, capital structure, and M&As. Besides recognizing the relevance of CEOs’ behavioral traits there is also a growing awareness that CEOs’ social capital (i.e. social networks) matters in corporate decisions. Hence, there is evidence that CEOs’ individual traits as well CEOs’ social capital can help explain firm behavior. Although the effects of behavioral traits and social capital are commonly studied separately, social networks is an aggregate concept that has its basis in individual behavior. There are reciprocal relationships between individual attributes and social networks. Such relations are however not yet well understood in the context of corporate policies. Thus, to investigate interrelations of individual attributes and social capital and their effects on corporate policies should offer new insights into corporate behavior.
This project therefore aims to investigate the interrelations between CEOs’ behavioral traits and social capital and how such interrelations affect corporate policies such as capital structure, investments, risk taking and performance.
Project time
2019-2022
Funding
The Jan Wallander and Tom Hedelius foundation, and the Tore Browaldh foundation (SEK 0.93 million)
