The Impact of Social Networks on Firms' Performance

The topic of my work is networking in corporations and its influence on their performance. According to Merriam-Webster Dictionary, networking is “the exchange of information or services among individuals, groups, or institutions”. In my work I consider networks between Board members and hired Chief Executive Officers (CEOs). I believe there are various possible measures for networking: coincidence of previous work places, family relationships (not necessarily direct: for example, sisters-in-law and brothers-in-law), and even social networks on the Internet (Twitter, Facebook, Instagram etc.). But I have chosen most memorable place for most people: their universities. Education serves as a conservative measure of networking in my thesis and connects people – namely, the Board members and Chief Executive Officers (CEOs) that are being hired by them. In this paper I analyze NASDAQ 100 companies – these are firms with the largest market capitalization as of 1st quarter of 2018 among those listed on NASDAQ stock exchange. In order to avoid outliers, I: 1) Include only US companies, 2) exclude firms with total assets less than $1 bln., and 3) exclude two specific sectors: financial institutions and utilities. The choice of the market is stipulated by availability of information and transparency. All in all, there are 87 companies left. I manually gathered information on the background of each CEO (years on Board, whether he\she also served as a Chairman of Board later on, whether he\she worked for the company before being promoted to CEO, universities, exact dates of start and end of work) and all the Board members (years on Board – to be matched with exact dates when exact CEO was hired, education, how many of them were on Board on the hiring date and how many of them matched that CEO by university) from Thomson Reuters Eikon and Capital IQ. Financial data was mostly gathered from Bloomberg.