Board-CEO friendship ties and firm value: evidence from US firms

Yaoyao Fan, Agyenim Boateng*, Timothy King, Claire MacRae

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

16 Citations (Scopus)


This study examines the impact of board-CEO friendship ties on firm value and explores potential channels through which changes in firm value may be conveyed, based on a sample of 1696 publicly listed firms in U.S. over the period of 2000–2014. The study reveals that board-CEO friendship ties have a negative and economically meaningful impact on firm value, as measured by Tobin's Q and Total Q. Regarding potential channels of firm value, we show that the negative influence of board-CEO friendship ties on firm value is reduced in firms with greater board advising requirements but intensified in firms with higher board monitoring needs. We also find social ties tend to destroy firm value whereas professional ties do not. Our results are robust to endogeneity concerns, and after controlling for board-CEO professional ties.
Original languageEnglish
Article number101373
JournalInternational Review of Financial Analysis
Early online date9 Jul 2019
Publication statusPublished - Oct 2019


  • board-CEO friendship ties
  • firm value
  • Directors
  • Agency theory

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance


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