The Research About The Effect Of Executives’ Social Networks On Corporate’s Investment Decisions

Cooperate investment activity can bring economic profit. Also it is an important operating move to promote the development of a company. Therefore, it is crucial whether rational investment decisions can be made to bring in capital flows. In some certain aspects, the decision makers and senior managers of each company have bigger voice, such as which part of capital being used to do the investment and which kind of strategy being adopted. Chinese society, generally speaking, is very importance to "social relationship", "Guan xi" in its own way plays an important role in many commercial activities. A lions share of scholars have found that our company executives’background characteristics including gender, age, education background, social experience, political and financial background, etc. have an impact of the company’s financial and strategic decisions. In recent years, company executives for related research has been a lot of background characteristics, company executives social networking has become a hot spot, but the research is not yet mature. From the perspective of "interpersonal relationship" this article takes an unique view to study the senior managers of listed companies, the social network similarly have an effect on the company’s invest and investment-cash flow sensitivity. At the same time, we analyze the different influences of the executives’social networks in the financial network, political networks and other networks.At first, this paper reviews the former study and empirical research, such as, the set theory, Structural holes theory, etc. In economic activities, social networks’ functions include transmission of information, access to resources, and so on. thereby enabling executives can use their own network of relationships within and outside the company to reduce the asymmetry of information, access to more resources, reduce the company’s financial constraints, which will invest in itself and reliance on internal cash flow when investing has been affected. In this paper, the network of social relations is divided into financial executives, political and other three aspects of social relation network, executives and investment cash flow sensitivity negative correlation assumptions, in 2013, Shanghai and Shenzhen motherboard manufacturing 429 listing Corporation as research sample, using Stata regression, validation data. The results of the study show that:the network of social relations executives are more abundant, the company’s investment cash flow sensitivity is low.This paper connects the social network of senior managers with investment decisions, focusing on the correlated influence of the former one on the latter, especially the sensitivity of investment-cash flow. This paper does not only broaden the study perspective of investment-cash flow sensitivity, but also rich the research contents of senior managers. Those are of certain innovative significance, and can be used as reference when a company hiring senior managers.