Social Networks of Firms on Corporate Social Responsibility and Financial Statement Comparability

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2016-08

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University of Hawaii at Manoa

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The first part of this dissertation investigates whether firms are more active at corporate social responsibility when they are more connected to others. Based on social network theory and legitimacy theory, this paper hypothesizes that firms, which are centrally located in social networks, tend to be more active at corporate social responsibility. The association is expected to be stronger when firms have higher profitability, or lower book-to-market ratios. Also, the relationship is predicted to be stronger under the good macroeconomic environment. Empirical analyses show that firms’ social networks are positively related with corporate social responsibility activities. The relationship is found to be stronger for profitable firms and under good economic conditions. But this study could not find interaction effects for book-to-market ratio. The second part of this study investigates the role of firms’ connectedness in issuing less comparable financial statements. Social network theory and literature find that organizations send and receive information, spread norms, and imitate other organizations’ practices via networks. Institutional theory suggests that inter-industry networks of professionals result in normative isomorphism which leads an organization to imitate other organizations’ behaviors in other industries and as a result issue less comparable financial statements. Empirical analyses show that firms, which are more centrally located in networks, tend to issue financial statements which are less comparable to industry peers’. Also, firms’ connectedness is negatively related with both cash flow comparability and accrual comparability.

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Online social networks in business, Social responsibility of business, Financial statement comparability

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Theses for the degree of Doctor of Philosophy (University of Hawaii at Manoa). Business

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