Managerial interlocking networks and firm risk spillover: evidence from China
International Journal of Managerial Finance
ISSN: 1743-9132
Article publication date: 7 November 2024
Abstract
Purpose
This paper examines the effect of managerial interlocking networks (MINs) on firm risk spillover by using a sample of Chinese A-share listed firms.
Design/methodology/approach
Applying the complex network approach, we build managerial interlocking networks (MINs) and leverage degree centrality to quantify a manager’s network position. To gauge firm risk spillover, we utilize the conditional autoregressive value at risk (CAViaR) model to compute the value-at-risk. Subsequently, we employ ordinary least squares to investigate the influence of MINs on firm risk spillover.
Findings
Our research uncovers a direct correlation between a firm risk spillover and the status of network positions within managerial interlocking networks; namely, the more central the position, the greater the risk spillover. This increase is believed to be due to central firms in MINs having greater connectedness and influence. This fosters a similarity in decision-making across different firms through interfirm managerial communication, thus amplifying the risk spillover. Economic policy uncertainty (EPU) and Guanxi culture furtherly intensify the effects of MINs. Additional analysis reveals that the impact of MINs on the firm risk spillover is significantly noticeable in non-state-owned enterprises, while good corporate governance diminishes the risk spillover prompted by MINs.
Originality/value
Our findings offer fresh insights into the interfirm risk outcome associated with MINs and extend practical guidelines for attenuating firm risk spillover with a view toward mitigating systemic risk.
Keywords
Acknowledgements
This work was supported by the National Natural Science Foundation of China [grant numbers: 72471195, 71901171] China Scholarship Council [grant number: 202306790157] Fund for cultivating practical and innovative ability of postgraduates in Northwestern Polytechnical University [grant number: PF2023020], University Doctoral Dissertation Innovation Fund of Northwestern Polytechnical [grant number: CX2024077], Shaanxi Provincial Social Science Foundation [grant numbers: 2022R016, 2022R024, 2022R033], Shaanxi Provincial Soft Science Project [grant numbers: 2022KRM111, 2023CX-RKX-033], The Fundamental Research Funds for the Central Universities [grant number: 3102021XJS01], The Soft Science Research Project of Shanghai Science and Technology Committee [grant number: 22692114100], Special Project for Philosophical and Social Sciences Research in Shaanxi Province [grant number: 2024QN018], Jiangxi Province Natural Science Foundation project [grant number: 20232BAB211008] and The project of the Science and Technology Department of Henan Province [grant number: 232102210064].
Citation
Chen, L., Niu, R., Yang, Y., Zhao, L., Xie, G. and Khan, I. (2024), "Managerial interlocking networks and firm risk spillover: evidence from China", International Journal of Managerial Finance, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJMF-01-2023-0002
Publisher
:Emerald Publishing Limited
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