مقاله انگلیسی رایگان در مورد سرمایه اجتماعی و ریسک پذیری شرکتها – الزویر 2020

This paper explores the influence of social capital on corporate risk-taking using a large sample of publicly traded US firms. We predict that firms with high social capital display a higher level of risk-taking behavior. Consistent with our prediction, we find a negative relationship between corporate risk-taking and social capital. This paper shows that the social environment transmits valuable capital to individuals and thereby influences their corporate decision-making process. We also find that the combined effects of excessive risk-taking and social capital result in value destruction to the firm. Our test results are robust to alternatives measures of risk-taking, addressing endogeneity issues, and alternative model specifications. The paper contributes to the finance literature by demonstrating social capital as an important determinant in the corporate decision-making process, particularly in corporate risk-taking decisions.

Introduction

Finance literature widely explores the importance of non-financial factors on the corporate decisionmaking process. For instance, Hilary and Hui (2009) document a link between individuals’ religiosity and organizational behavior. Kumar et al. (2011) find a connection between gambling attitudes and investors’ portfolio choices, corporate returns, and stock returns. John et al. (2011) find that firms located in remote places pay higher dividends. Fahlenbrach et al. (2012) document bank-specific stickiness in risk-taking culture as the main reason for persistent vulnerability to the crisis in some banks. Baxamusa and Jalal (2014) find a link between religion and capital structure decisions. Jiang et al. (2015) find religiosity as an important determinant of risk-taking in family firms. Similarly, prior research finds social capital an important determinant of audit fees (Jha and Chen, 2015), corporate social responsibility (Jha and Cox, 2015), corporate and individual decisions (Jha et al., 2018), and discretionary accruals and misrepresenting financial information (Jha, 2019). Therefore, the prior studies provide substantial evidence on the role of non-financial factors on corporate decisions. Standard agency models acknowledge the role of managerial discretion in corporate decisions. Numerous prior empirical studies document a significant role of human elements such as traits and managerial power, and investors’ preference in the firm policy (Bertrand and Schoar, 2003; Malmendier et al., 2011).