TY - JOUR
T1 - CEO Social Capital and the Value Relevance of Accounting Metrics
AU - Luehlfing, Michael S.
AU - McCumber, William R.
AU - Qiu, Huan
N1 - Publisher Copyright:
© 2023 by the authors.
PY - 2023/4
Y1 - 2023/4
N2 - Equity investors value CEO social capital when pricing firm equity. When CEO social capital is high, the value relevance of the book value of equity declines, whereas the value relevance of earnings measures increases. Results are stronger for firms in high-tech industries where information asymmetries are higher. Social capital may be deconstructed into informational and reputational effects and we report that social capital is a meaningful determinant of value relevance in both scenarios. Results are robust to alternative variable definitions, controls and tests for endogeneity. The results strongly suggest that CEO social capital improves the information environment around firms, benefiting users of accounting metrics.
AB - Equity investors value CEO social capital when pricing firm equity. When CEO social capital is high, the value relevance of the book value of equity declines, whereas the value relevance of earnings measures increases. Results are stronger for firms in high-tech industries where information asymmetries are higher. Social capital may be deconstructed into informational and reputational effects and we report that social capital is a meaningful determinant of value relevance in both scenarios. Results are robust to alternative variable definitions, controls and tests for endogeneity. The results strongly suggest that CEO social capital improves the information environment around firms, benefiting users of accounting metrics.
KW - accounting metrics
KW - CEO social capital
KW - value relevance
UR - https://www.scopus.com/pages/publications/85153631309
U2 - 10.3390/risks11040078
DO - 10.3390/risks11040078
M3 - Article
AN - SCOPUS:85153631309
VL - 11
JO - Risks
JF - Risks
IS - 4
M1 - 78
ER -