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Iftekhar Hasan explores social capital in latest research

Faculty | Apr 04, 2017 |

It’s a delicate balance between teaching and research for an eminent scholar. For Iftekhar Hasan, E. Gerald Corrigan Chair in International Business and Finance and co-director of the Center for Research in Contemporary Finance at the Gabelli School, juggling demanding commitments has lent a broader perspective to his work.

In between teaching, serving as scientific advisor at the Central Bank of Finland, and carrying out managing editor duties for the Journal of Financial Stability, he still makes time for new research. For example, teaching an investor relations course motivated him to further explore the value associated with investor relations and spurred a five-year study on U.S. IPO firms.

Hasan also has been studying how social capital, which is comprised of the secular norms and networks of people in a particular society, affects decision-making for individuals and for firms. What he’s found by looking at default data in the United States is that “borrowers in communities with greater social capital are significantly less likely to default on loans, even after adjusting for different levels of income and other characteristics such as credit scores.” At the company level, stronger social capital can even affect innovation, Hasan says, “by easing a firm’s access to external debt capital and by facilitating executives’ ability to contract for innovation with employees.”

Another current topic of investigation is the role of foreign ownership on the price informativeness of bank stocks. Based on a large sample of banks from 60 countries over 15 years, Hasan and co-researchers have uncovered findings that suggest foreign ownership significantly reduces bank opacity by promoting better corporate governance.

Adding to the more than 225 peer-reviewed articles he has published in finance, economics, accounting, and management journals, Hasan’s recent and forthcoming publications include: “Social Capital and Corporate Tax Avoidance,” in the Journal of Accounting Research (forthcoming); “Social Capital and Debt Contracting: Evidence from Bank Loans and Public Bonds,” in the Journal of Financial and Quantitative Analysis (forthcoming); “Relative Peer Quality and Firm Performance,” in the Journal of Financial Economics; “The Effect of Board Directors from Countries with Different Genetic Diversity Levels on Corporate Performance,” in Management Science; and “Urban Agglomeration and CEO Pay,” in the Journal of Financial and Quantitative Analysis.

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