Top management teams’ social capital in Taiwan. The impact on firm value in an emerging economy
| Date | 01 June 2005 |
| Published date | 01 June 2005 |
| DOI | https://doi.org/10.1108/14691930510592780 |
| Pages | 177-190 |
| Author | Chaur‐Shiuh Young |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Top management teams’ social
capital in Taiwan
The impact on firm value in an emerging
economy
Chaur-Shiuh Young
Department of Accounting, National Chung Cheng University, Min-Hsiung,
Taiwan, ROC
Abstract
Purpose – The paper aims to examine the contributions of top management teams’ (TMTs) social
capital to the creation of business value.
Design/methodology/approach – Least-squares regression is used to estimate the relationship
between TMT social capital and Tobin’s Q, while controlling for other firm- and industry-specific
explanatory variables.
Findings – The empirical results show that it is TMT extra-business group (but not intra-business
group) directorate ties that are viewed as valuable strategic assets by the marketplace, and the benefits
of extra-business group directorate ties mainly come from the relationships’ greater prominence, but
not from the relationships’ wider span or better position.
Research limitations/implications – Pastresearch has tended to focus on “who execut ives are” –
their background, personality, etc. Since the results show that executives’ extra-business group social
capital is strategically valuable, future research should take note that “whom executives know” – i.e.
their social capital – is equally relevant to firm value.
Practical implications – The prominence and prestige measures of a TMT’s extra-business group
network can be used by managers, external analysts and investors to assess to what extent firms are
capable of leveraging relationships with other firms, and thereby better predict future firm
performance and value.
Originality/value – This study contributes to the literature by investigating the differential effects
of TMT intra- and extra-business group directorships on firm values. Evidence from the present study
may serve as a step toward understanding the role of TMT social capital in creating potentially
valuable intangible assets in emerging economies dominated by business groups.
Keywords Intellectualcapital, Social marketing, Senior management, Team working, Taiwan
Paper type Research paper
Introduction
This study examines the contributions of top management teams’ (TMT’s) social
capital to the creation of business value. An array of studies have shown that in
general, current investments in various intangibles, e.g. research and development
(R&D), advertising and personnel training, are associated with higher future earnings
and stock returns (Lev, 2001), yet the importance of social capital is still overlooked in
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
www.emeraldinsight.com/researchregister www.emeraldinsight.com/1469-1930.htm
The author is very grateful for the comments of participants in the 2004 Intellectual Capital in
Taiwan International Conference, the guidance received from both Se-Hwa Wu (the guest editor)
and Nick Bontis (the associate editor), and the financial support from the Taiwan National
Science Council (NSC93-2416-H-194-038).
TMTs’ social
capital in
Taiwan
177
Journal of Intellectual Capital
Vol. 6 No. 2, 2005
pp. 177-190
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930510592780
To continue reading
Request your trial