Author(s)

Yan Jiang ¹

Affiliation(s)

¹ Santa Monica College, California, United States

Corresponding Author

Yan Jiang

ABSTRACT

This paper investigates the influence of CEO social connections on corporate investment efficiency, with a focus on relationship-based governance mechanisms. Using a large language model (LLM) to quantify CEOs' social networks centrality, the study finds that CEOs with more extensive social networks are associated with higher investment efficiency. This positive effect is especially pronounced in resource-concentrated industries, such as monopolistic sectors, and under conditions of greater CEO reputational concern. The above analysis supports that an informal governance mechanism drives this effect: CEO networks centrality function as relational contracts that discourage external partners from recommending low-quality projects, thereby improving investment outcomes beyond traditional information-sharing channels. Overall, this study provides a novel perspective on CEO networks as informal governance tools, enriching the understanding of how social ties shape corporate decision-making and investment efficiency beyond conventional informational explanations.

KEYWORDS

CEO social connections; Investment efficiency; Connection-governance; Guanxi; Large language model; Informal governance

CITE THIS PAPER

Yan Jiang. CEO Social Connections and Investment Efficiency: Evidence from a Large Language Model Approach. Accounting, Auditing and Finance (2026). Vol. 7, No.1, 8-19. DOI: http://dx.doi.org/10.23977/accaf.2026.070102.

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