We study the effect of social connections between divisional managers and CEO on the scale and success of innovation activities in U.S. diversified conglomerates. Divisional managers who previously worked or studied with CEO file a greater number of patents during their tenure at the segment....

Inefficiency of internal capital allocation is one of the sources of the observed diversification discount. We use a hand-collected sample of divisional managers in S&P500 industrial conglomerates and find that social connections among divisional managers are associated with capital allocation...

Suppliers socially connected to major customers with relation-specific investments have higher leverage ratios compared to unconnected suppliers. The presence of connections partially reduces supplier underleverage observed in supplier-customer relationships with relation-specific investments....