Social Capital and Accounting Conservatism
Mansoor Afzali, Gonul Colak, Iftekhar Hasan, Minna Martikainen
Journal of International Accounting, Auditing and Taxation,
Vol. 60 (June),
2026
Abstract
We investigate the relationship between county-level social capital in the U.S. and asymmetric earnings timeliness (accounting conservatism). We measure social capital by the strength of civic norms and the density of social networks in a community. We find that firms headquartered in regions with higher social capital have earnings that reflect bad news more quickly than good news. Two potential mechanisms driving this connection are evident in our findings. First, the positive link between social capital and asymmetric earnings timeliness is more pronounced in firms with weaker external oversight, suggesting that social capital compensates for weaknesses in these mechanisms by discouraging managers from delaying the recognition of bad news. Second, we illustrate that firms in high social capital regions are more likely to recruit senior executives with higher asymmetric earnings timeliness coefficients. This result implies a preference for managers who adopt more conservative accounting practices. We find similar results using an international sample of firms from 21 countries. Our findings offer new insights into how local social norms influence corporate financial reporting.
Read article
Halle Institute for Economic Research
Energy Price Shock Dampens Recovery – Inflation Rises Although the leading economic research institutes, in their joint spring forecast, consider the German economy to be in a…
See page
Archive
Media Response Archive 2021 2020 2019 2018 2017 2016 December 2021 IWH: Ausblick auf Wirtschaftsjahr 2022 in Sachsen mit Bezug auf IWH-Prognose zu Ostdeutschland: "Warum Sachsens…
See page
IWH-DPE in a Nutshell
IWH-DPE in a Nutshell The IWH Doctoral Programme in Economics (IWH-DPE) is the unit that organises the education of doctoral students at the IWH in close cooperation with partner…
See page
IWH EXplore
IWH EXplore Competitive Funding for Research Projects with External Involvement at IWH IWH EXplore gives scientists the opportunity to acquire supplemental funding, in addition to…
See page
East Germany
The Nasty Gap 30 years after unification: Why East Germany is still 20% poorer than the West Dossier In a nutshell The East German economic convergence process is hardly…
See page
The Network
About IWH CompNet The Competitiveness Research Network (CompNet) is a leading European research initiative dedicated to advancing the understanding of competitiveness and…
See page
FAQ
Frequently Asked Questions Answers to the most frequently asked questions about doctoral studies at IWH. What are the IWH's main areas of research? Researchers at IWH are leading…
See page
4th and 5th vintage
4th and 5th Vintage CompNet Dataset In 2015-2016 The Competitiveness Research Network released to the public respectively the 4th & 5th Vintage of its aggregated micro-based…
See page
Charts
Info Graphs Sometimes pictures say more than a thousand words. Therefore, we selected a few graphs to present our main topics visually. If you should have any questions or would…
See page
