Does social capital influence executive risk-taking incentives?
- Authors
- Jiraporn, P.; Lee, Sang Mook; Shim, Hyeongsop
- Issue Date
- Oct-2022
- Publisher
- ACADEMIC PRESS INC ELSEVIER SCIENCE
- Keywords
- cooperative norms; executive risk-taking incentives; Social capital
- Citation
- Finance Research Letters, v.49
- Journal Title
- Finance Research Letters
- Volume
- 49
- URI
- https://scholarworks.bwise.kr/gachon/handle/2020.sw.gachon/85168
- DOI
- 10.1016/j.frl.2022.103116
- ISSN
- 1544-6123
- Abstract
- We examine the impact of social capital at the US county level on managerial risk-taking incentives. We hypothesize that corporate executives in counties with higher social capital would accept lower equity-based compensation then faithfully behave in terms of efforts and risks following the shareholder trust or restrain themselves from rent-seeking which may harm shareholders. Our main test results with firm fixed effects are consistent with our hypothesis. Additional robustness checks—propensity score matching, instrumental variable, and difference-in-differences analyses—corroborate our main findings. Thus, it is highly likely that social capital has a curbing effect on executive risk-taking incentives. © 2022
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