Firm social networks, trust, and security issuances

Ming Fang, Iftekhar Hasan, Zenu Sharma, An Yan

Research output: Contribution to journalArticlepeer-review

2 Scopus citations


We observe that public firms are more likely to issue seasoned stocks rather than bonds when theirs boards are more socially-connected. These connected issuers experience better announcement-period stock returns and attract more institutional investors. This social-connection effect is stronger for firms with severe information asymmetry, higher risk of being undersubscribed, and more visible to investors. Our conjecture is this social-network effect is driven by trust in issuing firms. Given stocks are more sensitive to trust, these trusted firms are more likely to issue stocks than bonds. Trustworthiness plays an important role in firms’ security issuances in capital markets.

Original languageEnglish (US)
Pages (from-to)514-549
Number of pages36
JournalEuropean Journal of Finance
Issue number4-5
StatePublished - 2022

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance (miscellaneous)


  • Social networks
  • capital markets
  • security issuance
  • trust


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