Real options and CEO social connections: The role of financial flexibility
Publication Date
4-1-2025
Document Type
Article
Publication Title
Journal of Corporate Finance
Volume
91
DOI
10.1016/j.jcorpfin.2025.102749
Abstract
We examine the impact of CEO social connections on the value of real options. Consistent with the benefits of information transmission, reputation, and trust embedded in social connections, we find that CEO social connections act as real option facilitator through improved financial flexibility, alleviating financial constraints. The effect of CEO social connections is stronger for firms with high growth opportunities and when the CEO has a longer-term career horizon and greater ability. CEO social connections have an increasingly stronger impact on the value of real options. Overall, social connections influence the value of real options, a novel finding in the literature.
Keywords
CEO skills, Financial constraints, Growth opportunities, Real options, Social connections
Department
Accounting and Finance
Recommended Citation
Md Nazmul Hasan Bhuyan, Luis García-Feijóo, and Tijana Rajkovic. "Real options and CEO social connections: The role of financial flexibility" Journal of Corporate Finance (2025). https://doi.org/10.1016/j.jcorpfin.2025.102749
