Drinking into Friends: Alcohol Drinking Culture and CEO Social Connections

The influences of a CEO’s social connections to a firm have received much attention. However, less has been investigated on between-CEOs differences in building connections. This paper is a step towards filling this gap by investigating whether CEOs social connections are influenced by China’s local alcohol drinking culture. We use the sample of Chinese listed companies to test our hypotheses. We find that CEOs whose firms are located in regions with strong alcohol drinking culture have more social connections, both inside and outside the firms. We further find that the drinking culture only significantly affects the social connections of male CEOs, but not female CEOs. These findings remain robust after accounting for endogeneity by instrumental variable approach. This paper introduces the role of local alcohol drinking culture in CEOs social capital accumulating and sheds new lights on the impact of local culture on CEOs behaviors.