Social Capital, Product Market Competition and Corporate Disclosure of Proprietary Information

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)31B_Invited conference paper (non-refereed items)

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Original languageEnglish
Publication statusPresented - 26 Apr 2019

Workshop

TitleSeoul National University Accounting Seminar
LocationSeoul National University
PlaceKorea, Republic of
CitySeoul
Period26 April 2019

Abstract

We examine the impact of social capital in local communities on corporate disclosure of proprietary information. Firms located in communities with higher social capital care more about the collective interests of the local communities. While the disclosure of proprietary information has the benefit of improving stock prices, the proprietary information revealed can be exploited by the firm’s product market rivals to its disadvantage and impose significant costs on both investors and the local community. Thus, when managers take the interests of local communities into consideration, they will view the disclosure of proprietary information to be a more costly action compared to those who only consider investors’ interests alone. Our empirical analysis confirms that firms located in communities with higher levels of social capital are associated with less disclosure of proprietary information. In addition, we find that the negative association between social capital and the disclosure of proprietary information is more pronounced for firms facing higher proprietary cost, with lower external financing dependence or with higher long-term institutional ownership.

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Citation Format(s)

Social Capital, Product Market Competition and Corporate Disclosure of Proprietary Information. / KIM, Eunhee; Radhakrishnan, Suresh; WANG, Zheng; ZHU, Xindong.

2019. Seoul National University Accounting Seminar, Seoul, Korea, Republic of.

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)31B_Invited conference paper (non-refereed items)