Does Directors' Network Make an Influence on Price Comovement?: Category-based Investment or Internal Resource Valoe
Lu Xianwei;Wang Jianqiong;Dong Dayong;
Prices comovement derives from the relevance of information. Enterprises are embedded in social relationships and social structure, which influences the spread of information among corporates. Based on China's A-share listed companies, this paper studies the relationship between directors' network and price comovement. Empirical results show that directors' network makes an influence on price comovement, but this correlation is due to its internal resource value rather than investors classified category-based investment. Further analysis shows that there is a nonlinear relationship between centrality and average correlation coefficient. The impact of directors' network on other stocks becomes weaker when the number of corporate connection reaches a certain degree.