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- Title
Social capital and managerial opportunism: Evidence from option backdating.
- Authors
Gupta, Atul; Minnick, Kristina
- Abstract
Social capital potentially influences corporate outcomes by reducing the likelihood of managerial self‐serving behavior. This expectation follows from the likelihood that the consequences of self‐serving behavior are severe for firms in high‐social‐capital areas. Thus, we employ a sample of firms that backdated option grants to examine these propositions. Accordingly, we find a negative and significant relation between social capital and the probability and magnitude of backdating. Furthermore, we find a positive and significant relation between social capital and likelihood, as well as between the speed of the termination of senior executives and board members following option backdating. Notably, we find evidence for the notion that community norms can influence corporate behavior by creating an environment where self‐serving or bad behavior has severe consequences.
- Subjects
SOCIAL capital; SOCIAL norms; MORAL hazard; OPPORTUNISM (Psychology)
- Publication
Journal of Financial Research, 2022, Vol 45, Issue 3, p579
- ISSN
0270-2592
- Publication type
Article
- DOI
10.1111/jfir.12284