Social Capital of the Board of Directors and Performance of Brazilian Public Companies
Keywords:
Social capita. Administrative Council. Social network analysis. Performance. Capital markets.Abstract
Purpose: We analyze the effect of social capital of the board of directors on the market value of Brazilian public companies. Therefore, we use as an indicator of social capital, relational resources present in the direct ties, indirect and heterogeneous board.
Originality/Gap/Relevance/Implications: Pioneeringly, our study indicates that inconsistent results of studies evaluating board interlocking often occur because most studies only consider the centrality and the position of the companies in the network. This way they disregard that relations may have greater or lower degree of social capital.
Key methodological aspects: Empirically evaluate the relationship between companies by the directors and managers that they share, which is known as board interlock. Using social network analysis, identified which are the direct, indirect relations and structural holes of the companies, and also we measure the capital represented by each relationship from the market value of these relationships, which composed our measurement relational resources. Then, through econometric models we investigated the effects of relational resources on market value.
Summary of key results: Our results showed that heterogeneous relational resources have stronger and more significant influence than available resources in the direct relations of the board, while available resources in indirect relations were not significant.
Key considerations/conclusions: We demonstrated that the social capital really matters, because the resources provided by the alters are potential resources that can be used for the benefit of a firm individually, and also considering the heterogeneity of relations, it was found that structural holes are ways to get information and various resources, enabling greater competitive advantage.
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