Social Capital and Individual Ethics: Evidence from Financial Adviser Misconduct

46 Pages Posted: 7 Oct 2019 Last revised: 28 Jan 2021

See all articles by John (Jianqiu) Bai

John (Jianqiu) Bai

Northeastern University - D'Amore-McKim School of Business

Chenguang Shang

Suffolk University

Chi Wan

University of Massachusetts Boston - Department of Accounting and Finance

Yijia (Eddie) Zhao

University of Massachusetts Boston - College of Management

Date Written: January 27, 2021

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

JEL Classification: G41, K42

Suggested Citation

Bai, John (Jianqiu) and Shang, Chenguang and Wan, Chi and Zhao, Yijia, Social Capital and Individual Ethics: Evidence from Financial Adviser Misconduct (January 27, 2021). Available at SSRN: https://ssrn.com/abstract=3464689 or http://dx.doi.org/10.2139/ssrn.3464689

John (Jianqiu) Bai (Contact Author)

Northeastern University - D'Amore-McKim School of Business ( email )

220 B RP
Boston, MA 02115
United States

Chenguang Shang

Suffolk University ( email )

Boston, MA 02108
United States

Chi Wan

University of Massachusetts Boston - Department of Accounting and Finance ( email )

Boston, MA 02125
United States

Yijia Zhao

University of Massachusetts Boston - College of Management ( email )

100 Morrissey Blvd.
Boston, MA 02125
United States

HOME PAGE: http://sites.google.com/view/eddie-zhao/home

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