Examining the Relationship Between the Social Capital of the CEO and the Company's Risk-Taking and Financial Policies

Document Type : Research/Original/Regular

Authors

Department of Accounting and Financial Management, Faculty of Management and Accounting, University of Tehran, College of Farabi, Qom, Iran

Abstract

According to the information approach, the social capital of the CEO improves the company's resource management and economic efficiency, and increases the coordination of the company's financial policies, thereby reducing information asymmetry. Hence, the purpose of this research is to investigate the relationship between the social capital of the CEO and the company's risk-taking and financial policies. The statistical population of this research is all the companies accepted in the Tehran Stock Exchange and 140 companies were selected in the period of 2015 to 2020 by systematic elimination method. Also, to test research hypotheses, a multivariate regression model based on combined data was used. The results indicate that there is a direct and significant relationship between CEO's social capital and the company's risk-taking, and it also indicates that there is a direct and significant relationship between CEO's social capital and the company's financial policies. The CEO's social capital opens the way for the circulation of information, the results of the managers' efforts in the company's financial policies are observed by the market forces, it reduces the cost of external financing, expands the participation of the stock market, and plays an important role in portfolio selection decisions.

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Main Subjects

References

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Social Capital Management
Volume 10, Issue 3
October 2023
Pages 263-280

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