N. K. Chidambaran

We analyze the relationship between managers’ connections, corporate risk-taking, and corporate performance during the Great Recession. We show that corporate equity volatility increased substantially for firms operating in sectors severely affected by the crisis. We find that this effect was greater for firms with connected managers and that these firms adopted riskier corporate policies. Managers’ connections also helped firms to recover faster to their pre-crisis level of performance.

Tweet Facebook LinkedIn Save this article Send to Print this page We analyze the relationship between managers’ connections, corporate risk-taking, and corporate performance during the Great Recession. We show that corporate equity volatility increased substantially for firms operating in sectors severely affected by the crisis. We find that this effect was greater for firms with connected managers and that these firms adopted riskier corporate policies.