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This paper examines the effect of managerial interlocking networks (MINs) on firm risk spillover by using a sample of Chinese A-share listed firms.

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.

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.

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.