Institutions and Corporate Reputation: Evidence from Public Debt Markets
Xian Gu, Iftekhar Hasan, Haitian Lu
Journal of Business Ethics,
im Erscheinen
Abstract
Using data from China’s public debt markets, we study the value of corporate reputation and how it interacts with legal and cultural forces to assure accountability. Exploring lawsuits that change corporate reputation, we find that firms involved in lawsuits experience a decrease in bond values and a tightening of borrowing terms. Using the heterogeneities in legal and social capital environments across Chinese provinces, we find the effects are more pronounced for private firms, firms headquartered in provinces with low legal protections, and firms headquartered in provinces with high social capital. The results show that lawsuits that allege misconduct are associated with reputational penalties and that such penalties serve as substitutes for legal protections and as complements to cultural forces to provide ex post accountability and motivate ex ante trust.
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Social Capital and Regional Innovation: Evidence from Private Firms in the US
Iftekhar Hasan, Nada Kobeissi, Bo Wang, Haizhi Wang, Desheng Yin
Regional Studies,
Nr. 1,
2023
Abstract
In this study we investigate whether and to what extent social capital may affect regional innovation by focusing on private firms in the United States. We document that regional social capital is positively associated with the quantity, quality and novelty of county-level innovation by private firms. In addition, we find that the positive relation between social capital and regional innovation is more prominent in counties with a lower supply of financial capital. We also report that social capital is complementary to investments in research and development to produce inventive outcomes in local areas. Using a spatial Durbin model, we provide evidence that regional social capital has significant spillover effects in boosting the innovation activities of neighbouring counties.
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Productivity, Managers’ Social Connections and the Financial Crisis
Iftekhar Hasan, Stefano Manfredonia
Journal of Banking and Finance,
August
2022
Abstract
This paper investigates whether managers’ personal connections help corporate productivity to recover after a negative economic shock. Leveraging the heterogeneity in the severity of the financial crisis across different sectors, the paper reports that (i) the financial crisis had a negative effect on within-firm productivity, (ii) the effect was long-lasting and persistent, supporting a productivity-hysteresis hypothesis, and (iii) managers’ personal connections allowed corporations to recover from this productivity slowdown. Among the possible mechanisms, we show that connected managers operating in affected sectors foster productivity recovery through higher input cost efficiency and better access to the credit market, as well as more efficient use of labour and capital.
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Firm Social Networks, Trust, and Security Issuances
Ming Fang, Iftekhar Hasan, Zenu Sharma, An Yan
European Journal of Finance,
Nr. 4,
2022
Abstract
We observe that public firms are more likely to issue seasoned stocks rather than bonds when theirs boards are more socially-connected. These connected issuers experience better announcement-period stock returns and attract more institutional investors. This social-connection effect is stronger for firms with severe information asymmetry, higher risk of being undersubscribed, and more visible to investors. Our conjecture is this social-network effect is driven by trust in issuing firms. Given stocks are more sensitive to trust, these trusted firms are more likely to issue stocks than bonds. Trustworthiness plays an important role in firms’ security issuances in capital markets.
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Social Capital, Trusting, and Trustworthiness: Evidence from Peer-to-Peer Lending
Iftekhar Hasan, Qing He, Haitian Lu
Journal of Financial and Quantitative Analysis,
Nr. 4,
2022
Abstract
How does social capital affect trust? Evidence from a Chinese peer-to-peer lending platform shows regional social capital affects the trustee’s trustworthiness and the trustor’s trust propensity. Ceteris paribus, borrowers from higher social capital regions receive larger bid from individual lenders, have higher funding success, larger loan size, and lower default rates, especially for low-quality borrowers. Lenders from higher social capital regions take higher risks and have higher default rates, especially for inexperienced lenders. Cross-regional transactions are most (least) likely to be realized between parties from high (low) social capital regions.
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