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Journal of Business Ethics

, Volume 151, Issue 2, pp 539–562 | Cite as

Social Trust and Corporate Misconduct: Evidence from China

  • Wang Dong
  • Hongling Han
  • Yun Ke
  • Kam C. Chan
Article

Abstract

We study whether greater social trust is associated with a lower incidence of corporate misconduct. Both social norm and network theory suggest that social trust can affect managerial behavior and reduce the likelihood of misconduct behavior. Consistent with this prediction, we find that social trust is negatively associated with corporate misconduct behavior. Moreover, we show that, when media coverage is higher, the negative relation between social trust and corporate misconduct behavior is more pronounced. Further analyses suggest that social trust can help mitigate both disclosure-related and nondisclosure-related misconduct.

Keywords

Social trust Corporate misconduct China 

Notes

Acknowledgments

We acknowledge the helpful comments from two anonymous reviewers. Wang Dong acknowledges financial support from the National Natural Science Foundation of China (Grant Numbers NSFC-71302060 and NSFC-71332008). Hongling Han acknowledges the research grants from the National Natural Science Foundation of China (Grant Number NSFC-71272168) and from the Zhejiang Provincial Natural Science Foundation of China (Grant Number Y6110216). The usual caveats apply.

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Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  1. 1.Department of Accounting and FinanceZhejiang UniversityHangzhouChina
  2. 2.Department of AccountingBrock UniversitySt. CatharinesCanada
  3. 3.Department of FinanceWestern Kentucky UniversityBowling GreenUSA

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