Social Connections within Executive Teams and Management Forecasts

45 Pages Posted: 21 Aug 2017

See all articles by Ruihao Ke

Ruihao Ke

Southern Methodist University (SMU) - Accounting Department

Meng Li

University of Texas at Dallas - Naveen Jindal School of Management

Zhejia Ling

Iowa State University - College of Business

Yuan Zhang

University of Texas at Dallas

Date Written: August 15, 2017

Abstract

We examine the role of teamwork within the top executive teams in generating management forecasts. Using social connections within the executive team to capture the team’s interaction, cooperation, and teamwork, we find that social connections among team members are associated with higher management forecast accuracy, consistent with economic theories that information is dispersed within a firm and with sociology insights that social connections facilitate information sharing. Further analyses show that the association between social connections and forecast accuracy is stronger when the teams are just beginning to work together, when their firms face more uncertainty or adversity, and when the CEOs are less powerful. Our results hold for a subsample of executive teams that experience pseudo exogenous shocks to their social connectedness. Taken together, our results underscore the importance of teamwork among executives in the forecast generation process.

Keywords: social connection, executive team, management forecast

JEL Classification: M41

Suggested Citation

Ke, Ruihao and Li, Meng and Ling, Zhejia and Zhang, Yuan, Social Connections within Executive Teams and Management Forecasts (August 15, 2017). Management Science, Forthcoming; SMU Cox School of Business Research Paper No. 18-8. Available at SSRN: https://ssrn.com/abstract=3019734

Ruihao Ke

Southern Methodist University (SMU) - Accounting Department ( email )

United States
214-768-3702 (Phone)

Meng Li

University of Texas at Dallas - Naveen Jindal School of Management ( email )

800 W Campbell Road
Richardson, TX 75083-0688
United States
(972)883-2492 (Phone)

Zhejia Ling (Contact Author)

Iowa State University - College of Business ( email )

Ames, IA 50011-2063
United States
515-294-7882 (Phone)

Yuan Zhang

University of Texas at Dallas ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

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