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Congruence within the Top Management: How “Old Boy Network” Affects Executive Appointment and Performance

Title
Congruence within the Top Management: How “Old Boy Network” Affects Executive Appointment and Performance
Author
이은정
Keywords
Social networks; communication; organizational design; congruence; executives; Korea
Issue Date
2017-06
Publisher
서울대학교 경영연구소
Citation
Seoul Journal of Business, v. 23, No. 1, Page. 59-90
Abstract
This paper examines the determinants and the consequences of congruence between the CEO and other executives focusing on the role of previously-built school and regional ties. Using a sample of 2,129 firmyears from 2003 to 2006 for all firms listed on the Korea Stock Exchange, we find that executives are more likely to share the same school or regional background as the CEO when the firm is small, foreign ownership is low, or the CEO is a family member of the controlling shareholder. We also find that such congruence increases firm value when the firm is young and foreign ownership is large, but decreases firm value in firms tightly controlled by family member CEOs through large voting rights. These results suggest that congruence within the top management may facilitate communication when the nature of information being transmitted is “soft,” but may aggravate agency problems when CEOs are entrenched.
URI
https://www.kci.go.kr/kciportal/ci/sereArticleSearch/ciSereArtiView.kci?sereArticleSearchBean.artiId=ART002242209https://repository.hanyang.ac.kr/handle/20.500.11754/99284
ISSN
1226-9816
Appears in Collections:
COLLEGE OF BUSINESS AND ECONOMICS[E](경상대학) > BUSINESS ADMINISTRATION(경영학부) > Articles
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