The role of social capital in price efficiency: International evidence

Chin-Wen Hsin and Shu-Cing Peng

International Review of Financial Analysis, 2023, vol. 89, issue C

Abstract: This study finds that firms with higher social capital and trust, as measured by firm environmental and social (E&S) performance, demonstrate better stock price efficiency. The result in a sample of 45 countries remains robust to alternative approaches addressing the endogeneity concerns. This relation is mainly derived from a firm's E&S engagements related to third parties and the whole of society, which regulate the firm's information environment after accounting for other influences. The positive role of E&S performance is further shaped by the firm's associated macro-level trust and social capital, as proxied by the market's cultural and institutional factors.

Keywords: Information diffusion; Price delay; Trust; Social capital; Corporate social responsibility (search for similar items in EconPapers)
JEL-codes: D64 G14 M14 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:89:y:2023:i:c:s1057521923002569

DOI: 10.1016/j.irfa.2023.102740

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