Financiers’ Knowledge Networks and Freedom of the Press

• In Event: 40860 - Section on Economic Sociology Roundtables
  In Refereed Roundtable (60 minute): Table 11. Finance, Credits, and Rules

Abstract

Network behavior of individual financiers remains obscure because they are difficult to interview. Sophisticated financiers are reticent to convey their strategies to competitors. They value trustworthiness; therefore, the interviewer needs a mechanism to demonstrate that. Their busy schedules means they have little time for lengthy interviews. This study mitigated these challenges through a process of referrals among sophisticated financiers in leading financial centers. It yielded over 160 major financiers across diverse sectors, including corporate and investment banking, hedge funds, private equity, fund management, and private banking. They convey the importance of non-confidential knowledge acquired through the world-wide web and training programs and seminars. And, they conveyed the importance of confidential knowledge and how they acquired it through their network behavior. Results demonstrate that nonconfidential knowledge plays a minimal role in executing their business. Instead, confidential knowledge gained through their personal networks and that of their peers plays the critical role. Cohesive networks within firms comprise the key base of their knowledge because each member of the firm also has external networks to other cohesive networks. Major financiers are pivotal nodes in these networks which gives them access to immense structural social capital. These results are applied to Hong Kong’s position as a leading financial center in Asia-Pacific. China’s passage of the National Security Law for Hong Kong in 2020 has led to widespread charges that “freedom of the press” has been undermined. Therefore, its financiers will have difficulty executing their business. However, interview results specifically for Hong Kong financiers demonstrate that nonconfidential knowledge has little relevance for financiers; therefore, “freedom of the press” is not an issue. Instead, the mechanisms through which major financiers access sophisticated confidential knowledge allow them to execute their business regardless of any threats to “freedom of the press.”

Author

• David R. Meyer, Washington University in St. Louis