Enhancing bank transparency: Financial reporting quality, fraudulent peers and social capital

Marco Maria Mattei, Petya Platikanova

Research output: Indexed journal article Articlepeer-review

Abstract

This study examines the role of social norms in financial markets by relating bank transparency to social capital. Using comprehensive data on commercial banks, we provide empirical evidence that high social capital contributes to more transparent financial reporting, thereby enabling more precise risk assessments and promoting financial stability. We find that the effect of social capital is more pronounced when commercial banks are more complex and disclosure incentives of bank managers are strong. Our results suggest that more opaque reporting by peers explains lower transparency but financial misreporting is less contagious when social capital is high. Our study suggests that social capital can effectively improve reporting transparency when other mechanisms are not effective, thus securing financial system stability.

Original languageEnglish
Pages (from-to)3419-3454
Number of pages36
JournalAccounting and Finance
Volume63
Issue number3
DOIs
Publication statusPublished - Sept 2023

Keywords

  • accounting misstatements
  • bank transparency
  • financial misconduct
  • social capital

Fingerprint

Dive into the research topics of 'Enhancing bank transparency: Financial reporting quality, fraudulent peers and social capital'. Together they form a unique fingerprint.

Cite this