IDEAS home Printed from https://ideas.repec.org/a/oup/revfin/v20y2016i5p1673-1718..html
   My bibliography  Save this article

Social Capital and the Viability of Stakeholder-Oriented Firms: Evidence from Savings Banks

Author

Listed:
  • Charlotte Ostergaard
  • Ibolya Schindele
  • Bent Vale

Abstract

We show that social capital improves the viability of stakeholder-oriented firms operating in competitive markets. Studying exits from the population of Norwegian savings banks after deregulations, we find that banks located in communities with high social capital have a higher probability of survival, but no similar effect exists for commercial banks. Norwegian savings banks are collectively governed by their stakeholders and we provide evidence that social capital improves the efficiency of stakeholder governance. In high social capital areas, banks raise more deposits locally, distribute more of their surplus for altruistic purposes, and operate more locally focused branch networks.

Suggested Citation

  • Charlotte Ostergaard & Ibolya Schindele & Bent Vale, 2016. "Social Capital and the Viability of Stakeholder-Oriented Firms: Evidence from Savings Banks," Review of Finance, European Finance Association, vol. 20(5), pages 1673-1718.
    • Handle: RePEc:oup:revfin:v:20:y:2016:i:5:p:1673-1718.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/rof/rfv047
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Michael C. Jensen, 2010. "Value Maximization, Stakeholder Theory, and the Corporate Objective Function," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 32-42, January.
    2. ., 2001. "Corporate Governance in Islamic Banking," Chapters, in: Islamic Banking, chapter 7, Edward Elgar Publishing.
    3. La Porta, Rafael, et al, 1997. "Trust in Large Organizations," American Economic Review, American Economic Association, vol. 87(2), pages 333-338, May.
    4. Hart, Oliver & Moore, John, 1998. "Cooperatives vs. outside ownership," LSE Research Online Documents on Economics 19360, London School of Economics and Political Science, LSE Library.
    5. Tirole, Jean, 2001. "Corporate Governance," Econometrica, Econometric Society, vol. 69(1), pages 1-35, January.
    6. Paolo Emilio Mistrulli & Valerio Vacca, 2015. "Social capital and the cost of credit: evidence from a crisis," Temi di discussione (Economic working papers) 1009, Bank of Italy, Economic Research and International Relations Area.
    7. Reinhard H. Schmidt, 2009. "The Political Debate about Savings Banks," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 61(4), pages 366-392, October.
    8. Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, edition 1, volume 1, number 1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Miguel Biron & Felipe Córdova & Antonio Lemus, 2019. "Banks' business model and credit supply in Chile: the role of a state-owned bank," BIS Working Papers 800, Bank for International Settlements.
    2. Behr, Patrick & Foos, Daniel & Norden, Lars, 2017. "Cyclicality of SME lending and government involvement in banks," Journal of Banking & Finance, Elsevier, vol. 77(C), pages 64-77.
    3. Carlos Ferro-Soto & Luz Amparo Macías-Quintana & Paula Vázquez-Rodríguez, 2018. "Effect of Stakeholders-Oriented Behavior on the Performance of Sustainable Business," Sustainability, MDPI, vol. 10(12), pages 1-27, December.
    4. Cornett, Marcia Millon & Minnick, Kristina & Schorno, Patrick J. & Tehranian, Hassan, 2021. "Bank consumer relations and social capital," Journal of Banking & Finance, Elsevier, vol. 133(C).
    5. Leila Aghabarari & Andre Guettler & Mahvish Naeem & Bernardus Van Doornik, 2021. "Is there help indeed, if there is help in need? The case of credit unions during the global financial crisis," Economic Inquiry, Western Economic Association International, vol. 59(3), pages 1215-1233, July.
    6. Martin-Flores, Jose M., 2024. "Is bank misconduct related to social capital? Evidence from U.S. banks," Journal of Banking & Finance, Elsevier, vol. 167(C).
    7. Ricardo Gabriel Rossi Ortiz & Ricardo Manuel Rossi Valverde, 2023. "Eficiencia financiera de las Cajas Municipales de Ahorro y Crédito (CMAC) del Perú en el periodo 2015-2021," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 18(1), pages 1-20, Enero - M.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Champagne, Claudia & Coggins, Frank & Sodjahin, Amos, 2022. "Can extra-financial ratings serve as an indicator of ESG risk?," Global Finance Journal, Elsevier, vol. 54(C).
    2. Nicos A. Scordis & Yoshihiko Suzawa & Astrid Zwick & Lucia Ruckner, 2014. "Principles for Sustainable Insurance: Risk Management and Value," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 17(2), pages 265-276, September.
    3. Anagnostopoulou, Seraina C. & Tsekrekos, Andrianos E. & Voulgaris, Georgios, 2021. "Accounting conservatism and corporate social responsibility," The British Accounting Review, Elsevier, vol. 53(4).
    4. Ormazabal, Gaizka, 2018. "The Role of Stakeholders in Corporate Governance: A View from Accounting Research," CEPR Discussion Papers 12775, C.E.P.R. Discussion Papers.
    5. Ding, Wenzhi & Levine, Ross & Lin, Chen & Xie, Wensi, 2021. "Corporate immunity to the COVID-19 pandemic," Journal of Financial Economics, Elsevier, vol. 141(2), pages 802-830.
    6. KONISHI, Masaru & 小西, 大 & SAITO, Junyu, 2023. "Do firms consider stakeholder interests as a means to create shareholder value or as the ultimate goal? Evidence from Japanese dividend policies," Working Paper Series G-1-27, Hitotsubashi University Center for Financial Research.
    7. Ni, Xiaoran & Song, Wei & Yao, Jiaquan, 2020. "Stakeholder orientation and corporate payout policy: Insights from state legal shocks," Journal of Banking & Finance, Elsevier, vol. 121(C).
    8. Meade, Richard, 2005. "Ownership vs. Regulation in Electricity Reform: The Role of Governance," Working Paper Series 18953, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    9. Alice Monti & Pierpaolo Pattitoni & Barbara Petracci & Otto Randl, 2022. "Does corporate social responsibility impact equity risk? International evidence," Review of Quantitative Finance and Accounting, Springer, vol. 59(3), pages 825-855, October.
    10. Marshall, Andrew & Rao, Sandeep & Roy, Partha P. & Thapa, Chandra, 2022. "Mandatory corporate social responsibility and foreign institutional investor preferences," Journal of Corporate Finance, Elsevier, vol. 76(C).
    11. Hong Bo & Tao Li & Linda A. Toolsema, 2009. "Corporate Social Responsibility Investment And Social Objectives: An Examination On Social Welfare Investment Of Chinese State Owned Enterprises," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(3), pages 267-295, July.
    12. Jie Chen & Xicheng Liu & Wei Song, 2018. "CEO general managerial skills and corporate social responsibility," Working Papers 2018-16, Swansea University, School of Management.
    13. Alves, Carlos F. & Guedes, Maria João, 2022. "Narcissistic leaders do not share! The relationship between top managers' narcissism and the distribution of value added," Finance Research Letters, Elsevier, vol. 49(C).
    14. Stefano Fontana & Daniela Coluccia & Silvia Solimene, 2019. "VAIC as a Tool for Measuring Intangibles Value in Voluntary Multi-Stakeholder Disclosure," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(4), pages 1679-1699, December.
    15. Chowdhury, Rajib & Doukas, John A. & Park, Jong Chool, 2021. "Stakeholder orientation and the value of cash holdings: Evidence from a natural experiment," Journal of Corporate Finance, Elsevier, vol. 69(C).
    16. I-Ju Chen & Iftekhar Hasan & Chih-Yung Lin & Tra Ngoc Vy Nguyen, 2021. "Do Banks Value Borrowers' Environmental Record? Evidence from Financial Contracts," Journal of Business Ethics, Springer, vol. 174(3), pages 687-713, December.
    17. Amitava Roy, 2014. "Corporate Governance and Firm Performance: An Exploratory Analysis of Indian Listed Companies," Jindal Journal of Business Research, , vol. 3(1-2), pages 93-120, June.
    18. Claudio Loderer & Lukas Roth & Urs Waelchli & Petra Joerg, 2010. "Shareholder Value: Principles, Declarations, and Actions," Financial Management, Financial Management Association International, vol. 39(1), pages 5-32, March.
    19. Liu, Huan & Hou, Canran, 2023. "The impact of institutional investors' corporate site visits on corporate social responsibility," Emerging Markets Review, Elsevier, vol. 55(C).
    20. Kim, Hyun-Dong & Kim, Taeyeon & Kim, Yura & Park, Kwangwoo, 2019. "Do long-term institutional investors promote corporate social responsibility activities?," Journal of Banking & Finance, Elsevier, vol. 101(C), pages 256-269.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:revfin:v:20:y:2016:i:5:p:1673-1718.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/eufaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.