| Summary: | 碩士 === 國立政治大學 === 經濟學系 === 105 === Many recent researches examine the social networks between directors and CEO and show their negative impacts on corporate governance (see Barnea and Guedj, 2007; Gaspar and Massa, 2007). If, this negative relation between social connection and corporate governance is true, we would expect that family firms where the CEOs and directors are family members should have the worst governance and the worst performance. This certainly is not the case. So how exactly the social network between board members and CEO can influence corporate governance and the firm performance? Our paper provides the first theoretical discussion on this effect. In particular, our paper considers three scenarios: complete information where the prosocial inclinations are known for each other, incomplete information where the shareholders'.prosocial inclination (we denote as α ) is privately known for themselves, and incomplete information where the manager's .prosocial inclination (we denote as β ) is privately known for himself.
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