Do Informal Contracts Matter for Corporate Innovation? Evidence from Social Capital

Autor:	Kartik Raman, Atul Gupta, Chenguang Shang
Rok vydání:	2019
Předmět:	Economics and Econometrics Labour economics 050208 finance 05 social sciences Face (sociological concept) Corporate innovation Information asymmetry Accounting 0502 economics and business Relevance (law) Business 050207 economics Finance Labor union Social capital
Zdroj:	Journal of Financial and Quantitative Analysis. 55:1657-1684
ISSN:	1756-6916 0022-1090
DOI:	10.1017/s0022109019000498
Popis:	We examine the relevance of informal contracting mechanisms for corporate innovation. Using social capital to capture the social costs imposed on opportunistic behavior by management, we report evidence that firms headquartered in states with higher levels of social capital are associated with more innovation. This result is more pronounced when employees are more susceptible to holdup (e.g., firms with low labor union coverage, firms located in states with weak legal protections for employees, and firms surrounded by few external employment opportunities) and when employees face higher levels of information asymmetry. Our study highlights the importance of informal contracts for innovation.
Databáze:	OpenAIRE
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