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Trust and firm performance: A bi-directional study

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  • Xu, Qiao
  • Fernando, Guy D.
  • Tam, Kinsun

Abstract

This paper investigates the relationship between firm performance and trust in the firm. We use a trust measure based on the count of trust words in the Management Discussion and Analysis section of 10-K filings. Our regression results indicate that the current level of trust is associated with improved future performance, while current level of performance is positively related to future improvement in trust. We discuss these results and their managerial, investment and research implications.

Suggested Citation

  • Xu, Qiao & Fernando, Guy D. & Tam, Kinsun, 2019. "Trust and firm performance: A bi-directional study," Advances in accounting, Elsevier, vol. 47(C).
    • Handle: RePEc:eee:advacc:v:47:y:2019:i:c:s0882611018302268
    DOI: 10.1016/j.adiac.2019.100433
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    Cited by:

    1. Afzali, Mansoor, 2023. "Corporate culture and financial statement comparability," Advances in accounting, Elsevier, vol. 60(C).

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    Keywords

    Trust; Firm performance; MD&A;
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