Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2015-12-18
Revision-Date: 2015-02-20
Number: 15-135/V
Author-Name: Richard W. Carney
Author-Workplace-Name: Australian National University, Australia
Author-Name: Travers Barclay Child
Author-Workplace-Name: VU University Amsterdam, the Netherlands
Title: Business Networks and Crisis Performance: Professional, Political, and Family Ties
Abstract: Previous research on firm performance does not adequately account for the interrelatedness of a firm's professional connections, political ties, and family business-group affiliation. Many widely-cited findings may therefore be subject to confounding bias. To address this problem, we adopt a holistic approach by assembling a new dataset covering professional, political, and family networks for 1,290 large East Asian firms. We find that professional networks buoyed performance during the 2008 financial crisis; political and family networks did not. We provide evidence that information access is a key mechanism underlying the effect of professional networks. A one standard deviation improvement to a firm's professional network position cushioned the fall in quarterly ROA by approximately 35% during the crisis.
Classification-JEL: G3, G14, L14
Keywords: networks; political connections; interlocking directorates; family ownership; corporate governance
File-Url: https://papers.tinbergen.nl/15135.pdf
File-Format: application/pdf
File-Size: 1244787 bytes
Handle: RePEc:tin:wpaper:20150135