Social capital, external regulations, and financial reporting quality: evidence from community banks
Social capital, external regulations, and financial reporting quality: evidence from community banks
Yang, Ziyun; Dong, Xiaobo; Chiang, Wei-Chih
2021-01-01 00:00:00
Using a large sample of US community banks, we study how social capital affects bank managers' opportunistic reporting behaviour. We argue that high social capital reduces information asymmetry between managers and stakeholders and increases the cost of opportunistic reporting for managers. Supporting this argument, we find that social capital is negatively associated with discretionary loan loss provisions. We further find that the negative relation between social capital and opportunistic reporting behaviour is weaker when in banks subject to stronger regulations, which suggests that strong regulations act as a substitute to high social capital in constraining banks' opportunistic reporting behaviour.
http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.pngInternational Journal of Accounting, Auditing and Performance EvaluationInderscience Publishershttp://www.deepdyve.com/lp/inderscience-publishers/social-capital-external-regulations-and-financial-reporting-quality-zozzQsFRWy
Social capital, external regulations, and financial reporting quality: evidence from community banks
Using a large sample of US community banks, we study how social capital affects bank managers' opportunistic reporting behaviour. We argue that high social capital reduces information asymmetry between managers and stakeholders and increases the cost of opportunistic reporting for managers. Supporting this argument, we find that social capital is negatively associated with discretionary loan loss provisions. We further find that the negative relation between social capital and opportunistic reporting behaviour is weaker when in banks subject to stronger regulations, which suggests that strong regulations act as a substitute to high social capital in constraining banks' opportunistic reporting behaviour.
Journal
International Journal of Accounting, Auditing and Performance Evaluation
– Inderscience Publishers
To get new article updates from a journal on your personalized homepage, please log in first, or sign up for a DeepDyve account if you don’t already have one.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.