Executive Network Centrality and Stock Liquidity
41 Pages Posted: 14 Jun 2018
Date Written: May 29, 2018
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: Suggested Citation