The Impact of Social Capital on Financial Reporting: A Dynamic Panel Model of the Auditors' Trust and Corporate Social Responsibility by US Firms

Pakistan Journal of Social Sciences (PJSS), 36(2), 2016

13 Pages Posted: 22 Nov 2017

See all articles by Muhammad Suhail Rizwan

Muhammad Suhail Rizwan

National University of Sciences and Technology (NUST)

Asfia Obaid

National University of Sciences and Technology (NUST)

Dawood Ashraf

Islamic Development Bank - Islamic Research and Training Institute

Date Written: 2016

Abstract

We argue that socially responsible firms maintain a social capital and regularly demonstrate this via impactful public disclosures. By using a sample of 1218 US firms from 2000 to 2012 and a dynamic panel model, we investigate whether socially responsible firms, based on higher scores on corporate social responsibility (CSR) index, gain the higher trust of external auditor as reported in their public opinion. The empirical findings hint towards the existence of a social capital that CSR firms attempts to protect while preparing their financial report and in the process earns higher auditors’ ratings as compared with less socially responsible firms.

Keywords: CSR, PCA, Auditor’s Opinion, Dynamic Panel Data Model

Suggested Citation

Rizwan, Muhammad Suhail and Obaid, Asfia and Ashraf, Dawood, The Impact of Social Capital on Financial Reporting: A Dynamic Panel Model of the Auditors' Trust and Corporate Social Responsibility by US Firms (2016). Pakistan Journal of Social Sciences (PJSS), 36(2), 2016. Available at SSRN: https://ssrn.com/abstract=3074606 or http://dx.doi.org/10.2139/ssrn.3074606

Muhammad Suhail Rizwan (Contact Author)

National University of Sciences and Technology (NUST) ( email )

Pakistan

Asfia Obaid

National University of Sciences and Technology (NUST) ( email )

Pakistan

Dawood Ashraf

Islamic Development Bank - Islamic Research and Training Institute ( email )

P.O. Box. 9201
Jeddah, 21413
Saudi Arabia

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