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.

Is there a multicultural neighborhood price premium? We exploit plausibly exogenous variation in British colonization patterns in Northern Ireland during the early 1600s which created neighborhoods of varying religious composition that persists until today. These religious groups are culturally distinct, but are observationally equivalent ethnically and socioeconomically. A standard deviation increase neighborhood-level multiculturalism raises house prices by 9.6%. Multiculturalism raises property prices by increasing asset liquidity and housing demand as a wider spectrum of society demand houses in these areas. The findings and mechanism contrast sharply with prior evidence showing negative relationships due to homophily, social networks, and identification challenges.

Does information leakage in a target's social networks increase its stock price prior to a merger announcement? Evidence reveals that a target with more social connections indeed experiences a higher pre-announcement price run-up. This effect does not exist during or after the merger announcement, or in windows ending two months before the announcement. It is more pronounced among targets with severe asymmetric information, and weaker when the information about the upcoming merger is publicly available prior to the announcement. It is also weaker in expedited deals such as tender offers.