Abstract
We investigate the impact of CEO network centrality, a central position in a social network, on bank risk. Using a sample of 471 bank holding companies (BHCs) in the US from 1999 to 2018, we find that CEO network centrality is negatively related to bank risk and this is due to CEOs with higher levels of network centrality implementing less risky policies. Additionally, we find that information flow and CEO power are two channels through which CEO network centrality reduces bank risk. Our empirical results still hold when we employ a battery of methods to mitigate endogeneity issues. Our research further extends a new strand of studies focusing on the specific position/hierarchy of executives/directors in a social network.
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