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Volume 11
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10.3390/risks11040078
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Article

CEO Social Capital and the Value Relevance of Accounting Metrics

by
Michael S. Luehlfing
1,
William R. McCumber
1 and
Huan Qiu
2,*
1
College of Business, Louisiana Tech University, Ruston, LA 71272, USA
2
Else School of Management, Millsaps College, Jackson, MA 39210, USA
*
Author to whom correspondence should be addressed.
Risks 2023, 11(4), 78; https://doi.org/10.3390/risks11040078
Submission received: 24 February 2023 / Revised: 28 March 2023 / Accepted: 14 April 2023 / Published: 18 April 2023
(This article belongs to the Special Issue Accounting, Financial Reporting, and Disclosure)
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Abstract

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.
Keywords: CEO social capital; value relevance; accounting metrics CEO social capital; value relevance; accounting metrics

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MDPI and ACS Style

Luehlfing, M.S.; McCumber, W.R.; Qiu, H. CEO Social Capital and the Value Relevance of Accounting Metrics. Risks 2023, 11, 78. https://doi.org/10.3390/risks11040078

AMA Style

Luehlfing MS, McCumber WR, Qiu H. CEO Social Capital and the Value Relevance of Accounting Metrics. Risks. 2023; 11(4):78. https://doi.org/10.3390/risks11040078

Chicago/Turabian Style

Luehlfing, Michael S., William R. McCumber, and Huan Qiu. 2023. "CEO Social Capital and the Value Relevance of Accounting Metrics" Risks 11, no. 4: 78. https://doi.org/10.3390/risks11040078

APA Style

Luehlfing, M. S., McCumber, W. R., & Qiu, H. (2023). CEO Social Capital and the Value Relevance of Accounting Metrics. Risks, 11(4), 78. https://doi.org/10.3390/risks11040078

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