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
Date Written: 2016
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
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