Social Capital and Individual Ethics: Evidence from Financial Adviser Misconduct

John (Jianqiu) Bai (), Chenguang Shang (), Chi Wan and Yijia Eddie Zhao ()
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John (Jianqiu) Bai: Northeastern University
Chenguang Shang: Suffolk University
Yijia Eddie Zhao: University of Massachusetts Boston

Journal of Business Ethics, 2022, vol. 181, issue 2, No 13, 495-518

Abstract: Abstract We show that social capital has a strong mitigating effect on financial adviser misconduct in the United States. Moreover, advisers who have committed misconduct are also more likely to relocate to counties with a relatively lower level of social capital than that of his previously residing county. These findings provide support for both the deterrence and displacement effects of social capital on financial adviser misconduct, and are robust to tests that address potential endogeneity concerns. Our results shed new light on social capital as an informal governing and monitoring mechanism against individual unethical behavior.

Keywords: Social capital; Individual behavior; Financial advisers; Misconduct (search for similar items in EconPapers)
JEL-codes: G41 K42 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10551-021-04910-4

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