Consequences of local social norms: A review of the literature in accounting, finance, and corporate governance

Ahsan Habib, Mabel D' Costa and Ahmed Khamis Al‐Hadi

Accounting and Finance, 2023, vol. 63, issue 1, 3-45

Abstract: We synthesise the empirical archival research on the consequences of local social norms on accounting, finance, and corporate governance outcomes in an international setting. The literature reviewed is premised on the theory that corporations do not make decisions, but managers do, and managers are likely to be influenced by the socioeconomic environment of the region in which they operate and/or by the people with whom they interact. To provide a structure to our review, we identify social capital, religiosity, gambling norms, and corruption culture, as four constructs of local social norms and link these with financial reporting and external auditing, financial, investment, and dividend decisions, capital market consequences and finally, corporate governance and corporate social responsibility behaviour of firms. We highlight some limitations of the existing research and offer some suggestions for future research.

Date: 2023
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