Premium
Executive Network Centrality and Stock Liquidity
Author(s) -
Egginton Jared F.,
McCumber William R.
Publication year - 2018
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/fima.12237
Subject(s) - centrality , market liquidity , business , stock (firearms) , liquidity crisis , monetary economics , finance , economics , mechanical engineering , combinatorics , mathematics , engineering
We examine the relationship between stock market liquidity and the network centrality of firm executives. We find that firms whose executive officers are more central in the network of executives have narrower bid‐ask spreads. We use an exogenous network centrality shock of executive turnover and report that liquidity improves after firms hire executives with greater centrality. We present evidence that improved liquidity is attributable to efficient information flows around executives in more advantageous network positions.