Executive Network Centrality and Stock Liquidity

41 Pages Posted: 14 Jun 2018

See all articles by Jared F. Egginton

Jared F. Egginton

Boise State University - College of Business & Economics

William R. McCumber

College of Business, Louisiana Tech University

Date Written: May 29, 2018

Abstract

We examine the relationship between stock market liquidity and the network centrality of firm executives. We find that firms whose executive officers are more central in the network of executives have narrower spreads and reduced stock liquidity costs. We use an exogenous network centrality shock of executive turnover and report that liquidity improves after firms hire executives with greater centrality. We present evidence that improved liquidity is attributable to efficient information flows around executives in more advantageous network positions.

Keywords: stock market liquidity, networks, network centrality, information asymmetry, informational trading

JEL Classification: D85, G10, G14, L14

Suggested Citation

Egginton, Jared Frank and McCumber, William R., Executive Network Centrality and Stock Liquidity (May 29, 2018). Available at SSRN: https://ssrn.com/abstract=3186878 or http://dx.doi.org/10.2139/ssrn.3186878

Jared Frank Egginton (Contact Author)

Boise State University - College of Business & Economics ( email )

United States
2084264586 (Phone)

William R. McCumber

College of Business, Louisiana Tech University ( email )

COBB 209
P.O. Box 10318
Ruston, LA 71272
United States
318-257-2389 (Phone)
318-257-4253 (Fax)

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