Abstracts Category : Other

Firm Social Network, Information Transfer and Information Environment

by Avishek Bhandari

I investigate whether or not a firms social network size (also known as socialcapital) impacts the quality of its information environment. Following social capitaltheory, I posit three potential channels that help bring an informational advantage to wellconnectedfirms. First, well-connected firms are likely to have timely access to a broaderset of information that affords them the opportunity to disclose this information. Second,a social network fosters trust among social peers, which promotes the transfer of moreaccurate information within that network. Third, well-connected executives and directorshave greater reputational capital at stake, which may encourage them to provide accurateinformation to the market. I provide evidence that well-connected firms have higherquality information environments.I further document that the beneficial impact of the firms social network size onthe quality of the firms information environment is higher for complex firms. I also find that the beneficial effect of the firms social ties on the quality of the firms informationenvironment is greater when the firms connections are in the same industry or are topexecutives or are industry leaders or are financiers in the capital markets.My study extends existing social network literature by investigating whetherfirms social connections to outside executives and directors impact the quality of thefirms information environment. My paper focuses on the networking skills of theexecutives and directors and extends the literature on how executives and directorspersonal characteristics are important. Additionally, I respond to the call by Engelberg etal. (2013) to identify the mechanism by which a CEOs network creates value to the firmand well-connected CEOs get paid higher compensation. This study also contributes to agrowing debate in social network literature between social capital theory and agencytheory. Finally, my study is important to the regulators and standard setters as they canprovide further evidence on the impact of non-financial information on the informationquality surrounding the firm. 2017 Degree granted: Dissertation (Ph.D.) FloridaAtlanticUniversity, 2017. Collection: FAUAdvisors/Committee Members: Kohlbeck, Mark Dr. (Thesis advisor), College of Business (Degree grantor).