Assistant Professor
Institute of Economics and Finance
Nanjing Audit University, Nanjing, China
Email: mins6275@nau.edu.cn
Research Interests: Corporate Finance, Corporate Governance, Mergers and Acquisitions, Strategic Alliances
Curriculum Vitae (December 2018)
CEO connectedness and the cost of equity capital (with Angie Low and Siew Hong Teoh) - PDF
Presentations (* by coauthor): CAFM (2018), Nanyang Technological University - Accounting Department (2018*), National University of Singapore (2018*), Nanyang Technological University – Workshop by Harrison Hong (2017), Nanyang Technological University-Brown Bag (2016)
Abstract: A larger CEO network can reduce cost of equity by reducing information asymmetry between the firm and outsiders, and increase trust between the firm and other firms or stakeholders. Alternatively, a larger network can increase cost of equity because the higher CEO connectedness reduces the costs to the CEO of being fired, which encourages greater agency problems and higher risk decisions. We find a positive relation between CEO’s connectedness and the firm’s cost of equity, suggesting that the costs, on average, outweigh the benefits. The positive relation between CEO connections and cost of equity is attenuated for firms with high information asymmetry, consistent with the beneficial effects of improved information flow mitigating some of the adverse effects from agency costs and risk-taking. We use multiple ways to handle endogeneity and reverse causality problems, and our results are generally robust.
Financial constraints and firm growth strategies
