Crowdsourced forecasts and the market reaction to earnings announcement news
| Authors | Schafhaute, Veenman |
| Journal | The Accounting Review |
| Year | 2024 |
| Type | Published Paper |
| Abstract | This study examines whether crowdsourced forecasts of earnings and revenues help investors unravel bias in earnings announcement news, which is commonly derived from analyst forecasts. Our results suggest that investors, on average, understand and price the predictive signals reflected in crowdsourced forecasts about the bias in analyst-based earnings and revenue surprises. Using the staggered addition of firms to the Estimize platform, we find that crowdsourced coverage is associated with reductions in the mispricing of forecast bias and declines in earnings announcement premia. We further find some evidence that managers use income-increasing accruals to meet the crowdsourced forecast benchmark and that they respond to crowdsourced coverage through increased downward earnings and revenue guidance. Overall, we conclude that user-generated content on crowdsourced financial information platforms helps investors discount biases in traditional equity research and thereby better process the news in earnings announcements. |
| Keywords | Crowdsourcing, Estimize, sell-side analysts, forecast bias, earnings announcements, market reactions |
| URL | https://publications.aaahq.org/accounting-review/article-abstract/99/2/421/11602/Crowdsourced-Forecasts-and-the-Market-Reaction-to?redirectedFrom=fulltext |
| Tags | Archival Empirical | Manager / Firm Behavior |
Private communication between managers and financial analysts: Evidence from taxi ride patterns in New York City
| Authors | Choy, Hope |
| Year | 2023 |
| Type | Working Paper |
| Abstract | This study constructs a novel measure that aims to capture face-to-face private communications between firm managers and sell-side analysts by mapping detailed, large-volume taxi trip records from New York City to the GPS coordinates of companies and brokerages. Consistent with earnings releases prompting needs for private communications, we observe that daily taxi ride volumes between companies and brokerages increase significantly around earnings announcement dates (EAD) and reach their peak on EAD. After controlling for an extensive set of fixed effects (firm, analyst, year, and firm-broker) and other potential confounding factors, we find that increases in ride volumes around EAD are negatively associated with analysts' earnings forecast errors in periods after EAD and positively associated with the profitability of recommendations issued after EAD (but these effects dissipate over longer horizons). Taken together, our results suggest that analysts may obtain a private source of information orthogonal to their pre-existing information from these in-person meetings, which may help them better understand the implications of current earnings signals for future earnings. |
| Keywords | Private communications, sell-side analysts, taxis, private information, earnings forecasts, stock recommendations, profitability of stock recommendations, earnings announcements, Reg FD |
| URL | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3920680 |
| Tags | Archival Empirical | Asset Pricing, Trading Volume and Market Efficiency | Manager / Firm Behavior | Social Network Structure |
The rise of the Finfluencer
| Authors | Guan |
| Year | 2023 |
| Type | Working Paper |
| Abstract | In today's meme-riddled stock market, how viable do traditional theories of information exchange and price discovery remain? The conventional understanding of stock market price discovery focuses on the exchange of information, typically tied to the present value of an issuer's future cash flows, between traders. This paper explores the impact of "finfluencers"-those who wield outsize influence on investing decisions through social media-on this understanding. Finfluencers increasingly broker stock market information. Social media makes doing so easier than ever before. This paper explores two implications of the rise of finfluencers. First, finfluencers are not solely motivated to seek out fundamental value information and trade to profit off of it. Instead, they try to maximize popularity, be entertaining, and "grow their brand," among other motivations. Because they mediate the information that reaches retail investors and provide powerful coordination mechanisms across those investors, finfluencers' influence shapes the types of "information" and motivations that are reflected in stock price movements. Second, the more influence finfluencers wield, the more they can predict and even control trading patterns among their followers. From a finfluencer's perspective, stock price movements can become more predictable, which can weaken finfluencers' incentives to provide valuable information to their followers and make profiting at the expense of their followers more tempting. |
| Keywords | Meme stocks, retail investors, microstructure, stock markets, securities regulation |
| URL | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4400042 |
| Tags | Manager / Firm Behavior |
Spilling the beans on political consumerism: Do social media boycotts and buycotts translate to real sales impact?
| Authors | Liaukonyte, Tuchman, Zhu |
| Journal | Marketing Science |
| Year | 2023 |
| Type | Published Paper |
| Abstract | Brands increasingly face pressure from consumers to take a stance on political issues, but there is limited empirical evidence on the effect of political consumerism on sales. In this paper, we quantify the consequences of a brand taking a political stance. In July 2020, the chief executive officer of Goya, a large Latin food brand, praised then president Donald Trump, triggering a boycott and a counter "buycott" movement supporting the brand. Using consumer-level purchase data, we measure the net effect of the boycott/buycott movements on sales. Boycott-related social media posts and media coverage dominated buycott ones, but the sales impact was the opposite: Goya sales temporarily increased by 22%. However, this net sales boost fully dissipated within three weeks. We then explore heterogeneity in the sales response with the goal of understanding which households are most likely to engage in political consumerism and what factors serve as frictions to participation. We document large sales increases (56.4%) in heavily Republican counties but do not find a strong countervailing boycott effect in heavily Democratic counties or among Goya's core customer base-Latino consumers. Finally, we show that brand loyalty and switching costs are potential explanations for the limited evidence of boycotting among experienced Goya customers. |
| URL | https://pubsonline.informs.org/doi/abs/10.1287/mksc.2022.1386 |
| Tags | Archival Empirical | Manager / Firm Behavior |
The ripple effect of firm-generated content on new movie releases
| Authors | Lu, Dinner, Grewal |
| Journal | Journal of Marketing Research |
| Year | 2023 |
| Type | Published Paper |
| Abstract | Marketers frequently create social media content (i.e., firm-generated content; FGC) to ignite interest in new movies. Thus, there is a clear need to understand the magnitude and heterogeneity of the effect of FGC on movie demand and associated user-generated content (UGC). The authors empirically examine the complex interactions among FGC, UGC, and sales using social media (tweet) data that are normally available to firms. They investigate two potential mechanisms by which FGC may drive box office revenues: (1) a direct mechanism, such that users who see FGC directly drive revenue, and (2) an indirect "ripple effect," by which FGC increases movie-related UGC, which then drives consumption. By analyzing 145,502 firm-generated and 5.9 million user-generated Twitter posts associated with 159 movies, the authors find a positive and significant effect of FGC on movie sales, which UGC fully mediates, which supports the indirect ripple effect reasoning. Impressions of FGC by followers of firm accounts, as opposed to nonfollowers of firm accounts, mainly drive the effect of FGC on UGC. In addition, FGC by movie accounts is more effective than that by actors and studios. Firms' regular posts with a movie-specific hashtag are more effective than replies, retweets, and posts without the hashtag. The finding of the ripple effect suggests that movie executives should focus on creating FGC that sparks conversations among followers when new movies are released. |
| URL | https://journals.sagepub.com/doi/abs/10.1177/00222437221143066 |
| Tags | Archival Empirical | Manager / Firm Behavior |
The impact of social nudges on user-generated content for social network platforms
| Authors | Zeng, Dai, Zhang, Zhang, Zhang, Xu, Shen |
| Journal | Management Science |
| Year | 2023 |
| Type | Published Paper |
| Abstract | Content-sharing social network platforms rely heavily on user-generated content to attract users and advertisers, but they have limited authority over content provision. We develop an intervention that leverages social interactions between users to stimulate content production. We study social nudges, whereby users connected with a content provider on a platform encourage that provider to supply more content. We conducted a randomized field experiment (N=993,676) on a video-sharing social network platform where treatment providers could receive messages from other users encouraging them to produce more, but control providers could not. We find that social nudges not only immediately boosted video supply by 13.21% without changing video quality but also, increased the number of nudges providers sent to others by 15.57%. Such production-boosting and diffusion effects, although declining over time, lasted beyond the day of receiving nudges and were amplified when nudge senders and recipients had stronger ties. We replicate these results in a second experiment. To estimate the overall production boost over the entire network and guide platforms to utilize social nudges, we combine the experimental data with a social network model that captures the diffusion and over-time effects of social nudges. We showcase the importance of considering the network effects when estimating the impact of social nudges and optimizing platform operations regarding social nudges. Our research highlights the value of leveraging co-user influence for platforms and provides guidance for future research to incorporate the diffusion of an intervention into the estimation of its impacts within a social network. |
| URL | https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2022.4622 |
| Tags | Archival Empirical | Experimental / Survey-Based Empirical | Manager / Firm Behavior |
Competing for recommendations: The strategic impact of personalized product recommendations in online marketplaces
| Authors | Zhou, Zou |
| Journal | Marketing Science |
| Year | 2023 |
| Type | Published Paper |
| Abstract | We study how an online marketplace's personalized product recommendations and its consumer profiling accuracy affect third-party sellers' competition and the market outcomes. Sellers strategically adjust prices to compete for the marketplace's recommendations. As the marketplace more accurately predicts consumers' preferences, the equilibrium price first decreases and then increases, and both the marketplace's and the sellers' profits may decrease despite the improved recommendation accuracy. Moreover, recommending the most profitable product for each recommendation may reduce profits of the marketplace and the sellers, and the marketplace can benefit from excluding pricing information in its recommendation decisions to prevent sellers' recommendation competition. Counterintuitively, regulations that bar recommendations from considering profit margin information can lead to higher prices and thus harm consumers. These results are driven by competing sellers' three distinctive incentives: competing for recommendations, exploiting targeted consumers, and undercutting rivals' prices. We also find that our key insights remain qualitatively unchanged if the marketplace recommends products based on consumer surplus, and the equilibrium price will be lower in comparison. Finally, various extensions demonstrate the robustness of these results. |
| URL | https://pubsonline.informs.org/doi/abs/10.1287/mksc.2022.1388 |
| Tags | Archival Empirical | Manager / Firm Behavior |
Do managers' nonnative accents influence investment decisions?
| Authors | Barcellos, Kadous |
| Journal | The Accounting Review |
| Year | 2022 |
| Type | Published Paper |
| Abstract | Reactions to earnings calls are sensitive to subtle features of managers' speech, but little is known about the effect of nonnative accents in this setting. Nonnative-accented CEOs may avoid holding calls in English for fear of investors' negative stereotypes. However, theory indicates that stereotypes from the CEO position and nonnative accents conflict, and that the process of reconciling conflicting stereotypes requires effortful processing. We use a series of four experiments to test each link of the causal chain that we hypothesize based on this theory. We demonstrate that motivated investors reconcile conflicting stereotypes by inferring exceptional qualities, such as hard work and determination, that positively affect their impressions of nonnative-accented CEOs and, hence, of the company as an investment. We also show that, because bad news stimulates effortful processing, investors receiving bad (versus good) news are more likely to form a positive image of nonnative-accented CEOs and their companies. |
| Keywords | Earnings conference calls, investment decisions, nonnative accents, impressions of CEOs |
| URL | https://doi.org/10.2308/TAR-2020-0228 |
| Tags | Archival Empirical | Experimental / Survey-Based Empirical | Financing- and Investment Decisions (Individual) | Manager / Firm Behavior |
Social referral programs for freemium platforms
| Authors | Belo, Li |
| Journal | Management Science |
| Year | 2022 |
| Type | Published Paper |
| Abstract | We examine how freemium platforms can design social referral programs to encourage growth and engagement without sacrificing revenue. On the one hand, social referral programs generate new referrals from users who would not have paid for the premium features. On the other hand, they also attract new referrals from users who would have paid but prefer to invite others, resulting in more referrals but fewer paying users. We use data from a large-scale randomized field experiment in an online dating platform to assess the effects of adding referrals programs to freemium platforms and changing the referral requirements on users' behavior, namely, on their decisions to invite, pay, and engage with the platform. We find that introducing referral programs in freemium platforms can significantly contribute to increasing the number of referrals at the expense of revenue. Platforms can avoid the loss in revenue by reserving some premium features exclusively for paying users. We also find that increasing referral requirements in social referral programs can work as a double-edged sword. Increasing the referral threshold results in more referrals and higher total revenue. Yet these benefits appear to come at a cost. Users become less engaged, decreasing the value of the platform for all users. We explore two mechanisms that help to explain the differences in users' social engagement. Finally, and contrary to prior findings, we find that the quality of the referrals is not affected by the referral requirements. We discuss the theoretical and practical implications of our research. |
| Keywords | Field experiment, freemium business models, platform strategy, referral program |
| URL | https://pubsonline.informs.org/doi/full/10.1287/mnsc.2022.4301 |
| Tags | Archival Empirical | Consumer Decisions | Experimental / Survey-Based Empirical | Manager / Firm Behavior |
Meet the press: Survey evidence on financial journalists as information intermediaries
| Authors | Call, Emett, Maksymov, Sharp |
| Journal | Journal of Accounting and Economics |
| Year | 2022 |
| Type | Published Paper |
| Abstract | We survey 462 financial journalists and conduct 18 interviews to obtain insights on the inputs to their reporting, the incentives they face, and the factors that influence their coverage decisions. We report many findings relevant to the accounting literature and identify multiple avenues for future research. For example, financial journalists say the likelihood they write about a specific company or CEO increases when the company is controversial or the CEO has a colorful personality, suggesting journalists gravitate toward provocative topics. We also find that financial journalists routinely use company-issued disclosures and private phone calls with company management when developing articles, and that they believe they are evaluated primarily on the accuracy, timeliness, and depth of their articles. Journalists also believe monitoring companies to hold them accountable is one of financial journalism's most important objectives, but they often face negative consequences for writing articles that portray companies in an unfavorable light. |
| Keywords | Business press, financial journalists, media Information, intermediaries, social media, financial analysts |
| URL | https://doi.org/10.1016/j.jacceco.2021.101455 |
| Tags | Archival Empirical | Experimental / Survey-Based Empirical | Manager / Firm Behavior | Media and Textual Analysis | Social Network Structure |
Do hedge funds strategically misreport their holdings? Evidence from 13F restatements
| Authors | Cao, Da, Jiang, Yang |
| Year | 2022 |
| Type | Working Paper |
| Abstract | Hedge funds can subsequently amend their originally reported 13F quarterly holdings using restatements. We conduct the first systematic analysis of such filings, which are as common as confidential filings (used by funds to delay holdings disclosures), but affect four times as many stocks. Restated holdings are associated with significant abnormal returns, suggesting that some original holdings are strategically misreported to hide fundsâ trading intentions. We construct a return gap measure to gauge the value added by such restatements and find that it predicts future fund performance. Finally, commonly used databases such as Thomson Reuters do not fully adjust for restatements. |
| Keywords | Strategic disclosure, hedge funds, ownership disclosure, 13F holdings, restatement, fund skill |
| URL | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3907560 |
| Tags | Archival Empirical | Asset Pricing, Trading Volume and Market Efficiency | Investment Decisions (Institutional) | Manager / Firm Behavior |
Epidemiological expectations
| Authors | Carroll, Wang |
| Year | 2022 |
| Type | Working Paper | Literature Review Paper |
| Abstract | 'Epidemiological' models of belief formation put social interactions at their core; such models are widely used by scholars who are not economists to study the dynamics of beliefs in populations. We survey the literature in which economists attempting to model the consequences of beliefs about the future -'expectations'- have employed a full-fledged epidemiological approach to explore an economic question. We draw connections to related work on 'contagion,' narrative economics, news/rumor spreading, and the spread of internet memes. A main theme of the paper is that a number of independent developments have recently converged to make epidemiological expectations ('EE') modeling more feasible and appealing than in the past. |
| Keywords | Economic expectations, epidemiological expectations, social interactions, social dynamics, information diffusion, economic narratives |
| URL | https://www.nber.org/papers/w30605?utm_campaign=ntwh&utm_medium=email&utm_source=ntwg4 |
| Tags | Asset Pricing, Trading Volume and Market Efficiency | Consumer Decisions | Financing- and Investment Decisions (Individual) | Investment Decisions (Institutional) | Manager / Firm Behavior | Media and Textual Analysis | Propagation of Noise / Undesirable Outcomes | Social Network Structure | Social Transmission Biases | Theory |
Can social media inform corporate decisions? Evidence from merger withdrawals
| Authors | Cookson, Niessner, Schiller |
| Year | 2022 |
| Type | Working Paper |
| Abstract | This paper examines how social media informs corporate decisions by studying the decision of firm management to withdraw an announced merger. A standard deviation decline in abnormal social media sentiment following a merger announcement predicts a 0.64 percentage point increase in the likelihood of merger withdrawal (16.6% of the baseline rate). The informativeness of social media for merger withdrawals is not explained by abnormal price reactions or news sentiment. Consistent with learning from external information, we find that the social media signal is more informative after a firm adopts a corporate Twitter account, which offers a conduit for listening to investor feedback. In addition, most of the informativeness is driven by investors who reference fundamental information, not price trends, and is driven by longer tweets that likely contain investment analysis. The social media signal is also more informative for complex mergers in which analyst conference calls take a negative tone, driven by the Q&A portion of the call. Overall, these findings imply that social media is not a sideshow, but an important aspect of firm information environment. |
| Keywords | Social media, FinTech, feedback effects, capital allocation, M&A |
| URL | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4059633 |
| Tags | Archival Empirical | Asset Pricing, Trading Volume and Market Efficiency | Manager / Firm Behavior | Media and Textual Analysis |
Does individualism matter for hedge funds? A cross-country examination
| Authors | Dai, Nahata, Brauner |
| Journal | Journal of Corporate Finance |
| Year | 2022 |
| Type | Published Paper |
| Abstract | We examine how individualism, a cultural attribute that emphasizes autonomy, ability, and self-belief, affects hedge funds (HFs). Using Hofstede's framework, we show HFs located in individualistic (IDV) cultures structure their contracts with more performance-driven incentives, take greater risk, and herd less. Individualism also influences risk-shifting behavior: after initial underperformance, HFs increase risk-taking in high IDV cultures. Yet, HFs do not outperform in individualistic countries and draw lower Sharpe ratios, which highlights the link between individualism and overconfidence/over-optimism. Interestingly, HFs' survival is less sensitive to performance in individualistic cultures, again consistent with greater autonomy and opportunities in these countries. |
| Keywords | Culture, individualism, hedge fund contracts, risk-taking, survival |
| URL | https://doi.org/10.1016/j.jcorpfin.2021.102155 |
| Tags | Archival Empirical | Investment Decisions (Institutional) | Manager / Firm Behavior |
Strategic learning and corporate investment
| Authors | Decaire, Wittry |
| Year | 2022 |
| Type | Working Paper |
| Abstract | We show that firms anticipate information spillover from peers' investment decisions and delay project exercise to learn from them. While this information improves project selection, the cost of waiting erodes these gains. To establish causality, we exploit local exogenous variation from the 1800s that shapes the number of peers that a firm can learn from today. The effect is most salient when information is scarce, costs of waiting are low, projects have low expected profitability, and the source information is more relevant. Finally, the anticipation of spillovers dampens aggregate investment, suggesting a role for this mechanism in macro-investment models. |
| Keywords | Real options, strategic interactions, learning, peer behavior, investment, historical data |
| URL | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3923811 |
| Tags | Archival Empirical | Investment Decisions (Institutional) | Manager / Firm Behavior |
Democracy and the pricing of initial public offerings around the world
| Authors | Duong, Goyal, Kallinterakis, Veeraraghavan |
| Journal | Journal of Financial Economics |
| Year | 2022 |
| Type | Published Paper |
| Abstract | We find a negative relation between democracy and initial public offering (IPO) underpricing for a sample of 23,050 IPOs across 45 countries. The effect of democracy on underpricing is weaker for IPOs audited by Big 4 auditing firms, backed by venture capital firms, and with better disclosure specificity of use of proceeds. Democracy exerts a larger influence on underpricing for firms with higher agency problems, in countries with weaker institutional quality or shareholder protection, and during periods of high investor sentiment or economic policy uncertainty. Overall, our results highlight the importance of democracy in reducing IPO underpricing around the world. |
| Keywords | Democracy, IPO underpricing, information asymmetry, corporate governance |
| URL | https://doi.org/10.1016/j.jfineco.2021.07.010 |
| Tags | Archival Empirical | Asset Pricing, Trading Volume and Market Efficiency | Manager / Firm Behavior |
Using social network activity data to identify and target job seekers
| Authors | Ebbes, Netzer |
| Journal | Management Science |
| Year | 2022 |
| Type | Published Paper |
| Abstract | An important challenge for many firms is to identify the life transitions of its customers, such as job searching, expecting a child, or purchasing a home. Inferring such transitions, which are generally unobserved to the firm, can offer the firms opportunities to be more relevant to their customers. In this paper, we demonstrate how a social network platform can leverage its longitudinal user data to identify which of its users are likely to be job seekers. Identifying job seekers is at the heart of the business model of professional social network platforms. Our proposed approach builds on the hidden Markov model (HMM) framework to recover the latent state of job search from noisy signals obtained from social network activity data. Specifically, we use the latent states of the HMM to fuse cross-sectional survey responses to a job-seeking status question with longitudinal user activity data, resulting in a partially HMM. Thus, in some time periods, and for some users, we observe a direct measure of the true job-seeking status. We demonstrate that the proposed model can predict not only which users are likely to be job seeking at any point in time but also what activities on the platform are associated with job search and how long the users have been job seeking. Furthermore, we find that targeting job seekers based on our proposed approach can lead to a 29% increase in profits of a targeting campaign relative to the approach that was used by the social network platform. |
| URL | https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2021.3995 |
| Tags | Archival Empirical | Experimental / Survey-Based Empirical | Manager / Firm Behavior | Social Network Structure |
Impact of social interactions on duopoly competition with quality considerations
| Authors | Geng, Guo, Xiao |
| Journal | Management Science |
| Year | 2022 |
| Type | Published Paper |
| Abstract | We study the impacts of social interactions on competing firms' quality differentiation, pricing decisions, and profit performance. Two forms of social interactions are identified and analyzed: (1) market-expansion effect (MEE)-the total market expands as a result of both firms' sales-and (2) value-enhancement effect (VEE)-a consumer gains additional utility of purchasing from one firm based on this firm's previous and/or current sales volume. We consider a two-stage duopoly competition framework, in which both firms select quality levels in the first stage simultaneously and engage in a two-period price competition in the second stage. In the main model, we assume that each firm sets a single price and commits to it across two selling periods. We find that both forms of social interactions tend to lower prices and intensify price competition for given quality levels. However, MEE weakens the product-quality differentiation and is benign to both high-quality and low-quality firms. It also benefits consumers and improves social welfare. By contrast, VEE enlarges the quality differentiation and only benefits the high-quality firm, but is particularly malignant to the low-quality firm. It further reduces the consumers' monetary surplus. Such impact is consistent, regardless of whether the VEE interactions involve previous or current consumers. We further discuss several model extensions, including dynamic pricing, combined social effects, and various cost structures, and verify that the aforementioned impacts of MEE and VEE are qualitatively robust to those extensions. Our results provide important managerial insights for firms in competitive markets and suggest that they need to not only be aware of the consumers' social interactions, but also, more importantly, distinguish the predominant form of the interactions so as to apply proper marketing strategies. |
| URL | https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2021.3972 |
| Tags | Archival Empirical | Manager / Firm Behavior |
A theory of financial media
| Authors | Goldman, Martel, Schneemeier |
| Journal | Journal of Financial Economics |
| Year | 2022 |
| Type | Published Paper |
| Abstract | We present a model of media coverage of corporate announcements. Firms strategically use the media to communicate corporate announcements to a group of traders who observe announcements not directly but through media reports. Journalists strategically select which announcements to report to readers. Media coverage inadvertently incentivizes firms to manipulate the underlying announcements. In equilibrium, media coverage is tilted towards less manipulated negative news. The presence of financial journalists leads to more manipulation but makes stock prices more informative on average. We provide additional predictions regarding the media's impact on the quality of firm announcements and stock prices. |
| Keywords | Financial journalism, disclosure, manipulation, price quality |
| URL | https://www.sciencedirect.com/science/article/pii/S0304405X21003081 |
| Tags | Archival Empirical | Manager / Firm Behavior | Theory |
Competing for talent: Firms, managers, and social networks
| Authors | Hacamo, Kleiner |
| Journal | The Review of Financial Studies |
| Year | 2022 |
| Type | Published Paper |
| Abstract | Do social networks help firms recruit talented managers? In our setting, firms are randomly connected to prospective young managers through former employees. Under a discrete choice model, we find networks increase the likelihood firms hire high-ability managers, while having no effect on the hiring rate of low-ability managers. Effects are greatest for nonlocal firms, strong ties, and peers living in the same neighborhood. Survey evidence suggests social networks promote recruitment by providing information about firm fundamentals to potential applicants. Our results help rationalize why the majority of managers hold prior connections to the firm. |
| URL | https://academic.oup.com/rfs/article-abstract/35/1/207/6146360?redirectedFrom=fulltext |
| Tags | Archival Empirical | Manager / Firm Behavior | Social Network Structure |