Social Networks: The Impact on Firms’ Information Environment and Corporate Communication

40 Pages Posted: 2 Sep 2009 Last revised: 29 Aug 2012

See all articles by Joanne Horton

Joanne Horton

University of Warwick - Warwick Business School

George Serafeim

Harvard Business School

A. Irem Tuna

London Business School

Date Written: September 1, 2009

Abstract

We construct an interlocking-directorship network and we use social network and graph theory to identify firms that have access to a wider diversity of information, early access to that information and more control over information diffusion. We examine whether, as predicted by the theory, these firms have higher information asymmetry, and if they communicate the information they possess through mandatory and voluntary accounting methods. Our results are consistent with firms that have a brokerage position in the network exhibiting higher information asymmetry but communicating their proprietary information through discretionary accruals and voluntary disclosure.

Keywords: Voluntary and mandatory disclosure, Social networks, Accruals, Management forecasts, Information Environment, Corporate Communication

JEL Classification: M41

Suggested Citation

Horton, Joanne and Serafeim, George and Tuna, Ayse Irem, Social Networks: The Impact on Firms’ Information Environment and Corporate Communication (September 1, 2009). AAA 2010 Financial Accounting and Reporting Section (FARS) Paper, Available at SSRN: https://ssrn.com/abstract=1466063 or http://dx.doi.org/10.2139/ssrn.1466063

Joanne Horton (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

George Serafeim

Harvard Business School ( email )

Boston, MA 02163
United States

HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=15705

Ayse Irem Tuna

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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