Ties that bind: exploring corporate networks, decision-making dynamics in the financial market, labor-management relations, and organizational performance

Ties that bind: exploring corporate networks, decision-making dynamics in the financial market, labor-management relations, and organizational performance

Corporate governance relies significantly on the board of directors, who act as custodians of shareholders' interests. The dynamics of social connections between Chief Executive Officers (CEOs) and board members form a critical element that influences information exchange within this vital gove...

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Bibliographic Details
Published in:Future business journal Vol. 10; no. 1; pp. 31 - 16
Main Authors: da Silva, Emerson Jorge, Ramos, Fernando Maciel, Cembranel, Priscila, Witt, Cleonice
Format: Journal Article
Language:English
Published: Berlin/Heidelberg Springer Berlin Heidelberg 01-12-2024
Springer Nature B.V
SpringerOpen
Subjects:
Asymmetry
Board of directors
Boards of directors
Business and Management
Corporate governance
Decision making
Earnings management
Emerging markets
Governance
Professional relationships
Professionals
Social connections
Stockholders
Social connections
Governance
Performance
Board of directors
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Summary:Corporate governance relies significantly on the board of directors, who act as custodians of shareholders' interests. The dynamics of social connections between Chief Executive Officers (CEOs) and board members form a critical element that influences information exchange within this vital governance structure. This study seeks to assess the impact of these social connections on organizational performance. We conducted a comprehensive analysis of the professional backgrounds of CEOs and board members to measure the extent of their social connections. Employing multiple regression analysis with robust error corrections, we considered essential economic and financial metrics, including Return on Assets (ROA), Return on Equity (ROE), and Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA). Our findings reveal that professional social connections have a positive influence on ROA (β = 0.0230|p-value ≤ 0.05) and EBITDA (β = 420,517,1|p-value ≤ 0.05), while educational connections exhibited no significant effect, and familial connections were found to adversely affect EBITDA (β = − 516,307,0|p-value ≤ 0.05). This study highlights the real influence of social connections on firm performance, shedding light on the complex interplay between social dynamics and corporate success. These insights contribute to a more comprehensive understanding of corporate governance and the factors driving organizational performance. Graphical abstract
ISSN:2314-7210
2314-7202
2314-7210
DOI:10.1186/s43093-024-00317-5