The Protective Effect and Boundary Conditions of CEO Social Networks: Evidence from Corporate Climate Risk

Amid deepening global climate governance and corporate environmental challenges, this study elevates climate risk management from passive compliance to proactive governance, examining its impact on corporate sustainability. Grounded in an integrated framework of upper echelons theory, institutional theory, and resource dependence theory, we analyze A-share listed companies in China from 2015 to 2023 to investigate the protective effect of CEO social networks on corporate climate risk and its boundary conditions. Using textual analysis of annual reports to measure climate risk exposure, we find that CEO social networks significantly reduce corporate climate risk. This protective effect remains robust after addressing endogeneity concerns and conducting rigorous sensitivity tests, including alternative variable measurements and fixed-effects specifications. However, we identify three critical boundary conditions. First, corporate carbon emission intensity positively moderates this relationship, with the protective effect being most pronounced in high-emission firms. Second, CEOs' overseas experience unexpectedly weakens the network effect, revealing a cognitive boundary. Third, regional environmental regulation intensity strengthens the network effect, demonstrating institutional reinforcement. Mechanism analysis shows that CEO social networks mitigate climate risk primarily through promoting corporate digital transformation. From a capital market perspective, high climate risk firms face financing differentiation: while attracting patient capital, they encounter exclusion from green finance, reflecting heterogeneous market assessment of climate risk. This study contributes by systematically examining the protective effect and multidimensional boundaries of CEO social networks, advancing theoretical understanding of formal and informal institutional interactions in environmental governance. Our findings offer practical insights for firms building climate resilience, investors identifying environmental risks, and regulators refining policy design, with direct implications for optimizing executive team composition and balancing capital structure in complex institutional environments.