Bowling Alone, Bowling Together: Is Social Capital Priced in Bank Loans?

Cheng, C. S. Agnes; Jing, Wang; Zhang, Ning; Zhao, Sha

doi:10.1177/0148558x17724890

Cited by 27 publications

(16 citation statements)

References 52 publications

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“…This study makes several contributions to the literature. My study extends an emerging stream of accounting literature that documents the effect of social capital on firms' behaviors (Alm, Clark, and Leibel 2011;Jha 2013;Jha 2014;Jha and Chen 2015;Cheng et al 2016;Li, Tang, and Jaggi 2016). To my knowledge, it is the first study examines that effect of social capital on analyst forecast accuracy.…”

Section: Introductionsupporting

confidence: 52%

“…build the county-level social capital index based on four factors: the census response rate, the voter rate, the number of social and civic associations, and the number of nongovernment organizations in each county. Consistent with the argument of Guiso et al (2004), , and Cheng et al (2016), this index captures the resources that accrue to people as a result of participation in social networks. Following Dhaliwal and Radhakrishnan (2012), I also use analyst forecast error as an inverse measure of forecast accuracy.…”

Section: Introductionmentioning

confidence: 83%

“…Jha and Chen (2015) focuses on the dimension of mutual trust in social capital and finds that auditors judge the trustworthiness of their clients based on where the firm is headquartered and charge a premium when they trust the firm less. Cheng et al (2016) documents that firms with higher social capital are associated with lower loan spread as firms headquartered in high social capital counties are more likely to honor obligations and less likely to default.…”

Section: Benefits Of Social Capitalmentioning

confidence: 99%

“…Following Cheng et al (2016), I employ firms' headquarters relocations to better explore the causality. I extract firms' historical zip code from their 10-K filings downloaded from SEC's EDGAR system through textual analysis.…”

Section: Headquarters Relocation Shockmentioning

confidence: 99%

“…The empirical tests thus far suggest that social capital and analyst forecast accuracy are significantly associated. Following Cheng et al (2016), I employ firms' headquarters relocations to better establish causality. Using a sample of firms' relocating their headquarters, I dichotomize the sample into firms that move to a county with higher social capital and those that move to a county with lower social capital.…”

Section: Introductionmentioning

confidence: 99%

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Social Capital and Analyst Forecasts

Dai

2017

SSRN Journal

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This study examines the effect of social capital on analyst forecast accuracy. Using a county-level measure of social capital, I find that firms headquartered in counties with high social capital have greater forecast accuracy than firms headquartered in low social capital counties. In addition, I conduct two cross-sectional tests under conditions where social capital facilitates analyst forecast information collection and where social capital provides more assurance of information reliability. I find that the effect of social capital is more pronounced when firms' headquarters are close to analyst brokerage firms. This is because geographically proximate analysts may have more channels to collect information. I also show that since high social capital can reduce analysts' time and effort to verify the reported earnings when a firm has complicated operation, effect of social capital is more pronounced when a firm's operation is complex. I also find that investors react more strongly to analyst forecast for firms headquartered in counties with low social capital, suggesting that the analyst's role as an information intermediary is more valuable in this setting. Additionally, I employ the relocation of firms headquarters to better establish causality. The results are robust to regional fixed effect, accounting quality, management guidance, analyst fixed effect, and alternative measure of social capital. In sum, these findings suggest that social capital is an important factor that affects analysts forecast accuracy and informativenesss. v Acknowledgments I would like to express my greatest gratitude to everyone who supported me throughout my time at The City University of New York. First and foremost I would like to thank the co-chairs of my dissertation committee: Professor Carol Marquardt and Professor Rong Huang for their valuable guidance, encouragement, and kindness during my doctoral studies. They set excellent examples as successful professors and prolific researchers which would inspire me in my whole career. I am also grateful for my dissertation committee members: Professor Min Shen and Professor Lin Peng. The dissertation would have been impossible for their suggestive comments and insights. In addition to my committee, I would also like to thank faculty and staff in Accounting Department at Baruch College for providing a knowledgeable, supportive, and constructive work environment. Without the tremendous time and effort they devote to doctoral program, I would not make all the progress during my doctoral studies. Their willingness and availability of working with doctoral students witness every step of my progress on conducting research, improving teaching skills, and developing academic personnel. A very special thank you to my coauthors in all the other research projects for their enormous and valuable inspiration, endeavor, and support. I am also thankful to my fellow doctoral students and previous cohorts for their friendship, help, and collaborative discussions of research issues. Last but not leas...

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Section: Introductionsupporting

confidence: 52%

Section: Introductionmentioning

confidence: 83%

Section: Benefits Of Social Capitalmentioning

confidence: 99%

Section: Headquarters Relocation Shockmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Social Capital and Analyst Forecasts

Dai

2017

SSRN Journal

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Corporate social responsibility of U.S.‐listed firms headquartered in tax havens

Lee

2020

Strategic Management Journal

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Research SummaryUsing 138 firm‐year observations for 46 U.S.‐listed firms headquartered in tax havens from 2004 to 2013, this study employs a matched‐sample design and documents that the level of corporate social responsibility (CSR) engagement is relatively lower for firms with tax haven headquarters (HQ) than for those with U.S. HQ. This result is robust to the use of firm philanthropy as a measure of CSR engagement and holds true in an environment with high CSR expectations from U.S. communities. In an alternative setting of HQ relocations within the United States, we use a difference‐in‐differences methodology and find that when firms move their HQ to states with lower corporate income taxes, they decrease the level of CSR engagement. Overall findings are consistent with corporate culture theory.Managerial SummaryThis article examines CSR engagement of U.S.‐listed firms headquartered in tax havens. Using data from 2004 to 2013, we find that firms with tax haven HQ exhibit a relatively lower level of CSR engagement than otherwise similar firms headquartered in the United States. In the same vein, tax‐haven‐headquartered firms tend to give less to charity, even when they face high CSR expectations from U.S. communities. In an alternative setting of HQ relocations within the United States, we document that the level of corporate social engagement is more likely to drop for firms that move their HQ to lower‐tax regions. We interpret our findings as evidence of corporate culture affecting both the tax avoidance and CSR activities of firms headquartered in tax havens.

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Mandatory CSR and sustainability reporting: economic analysis and literature review

2021

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This study collates potential economic effects of mandated disclosure and reporting standards for corporate social responsibility (CSR) and sustainability topics. We first outline key features of CSR reporting. Next, we draw on relevant academic literatures in accounting, finance, economics, and management to discuss and evaluate the potential economic consequences of a requirement for CSR and sustainability reporting for U.S. firms, including effects in capital markets, on stakeholders other than investors, and on firm behavior. We also discuss issues related to the implementation and enforcement of CSR and sustainability reporting standards as well as two approaches to sustainability reporting that differ in their overarching goals and materiality standards. Our analysis yields a number of insights that are relevant for the current debate on mandatory CSR and sustainability reporting. It also points scholars to avenues for future research.

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Bowling Alone, Bowling Together: Is Social Capital Priced in Bank Loans?

Cited by 27 publications

References 52 publications

Social Capital and Analyst Forecasts

Social Capital and Analyst Forecasts

Corporate social responsibility of U.S.‐listed firms headquartered in tax havens

Mandatory CSR and sustainability reporting: economic analysis and literature review

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