Financial Status and Social Capital

Document Type : Research/Original/Regular

Authors

1 Assistant Professor, College of Farabi, University of Tehran, Qom, Iran

2 Ph.D. Student, College of Farabi, University of Tehran, Qom, Iran

Abstract

The economic fluctuations and cycles of prosperity and stagnation have always faced investors with concerns over predicting firms’ economic prospect and the factors affecting it. The models of financial status provide an overview of the economic status and performance of the firms to stakeholders, and on the other hand, social capital (as an economic source and intangible asset) plays a fundamental role in the success and fulfillment of business goals. The purpose of this study is to investigate the relationship between social capital and the financial status of companies. In this regard, the study has relied on the cognitive (including religiosity, family values, and collectivism) and structural (including relations with other companies and relationship with government) variables as indicators of social capital and Altman's modified model as an indicator of financial status. The research sample includes 119 companies from Tehran Stock Exchange during the years 2009 to 2017, and the hypothesis testing method is the multivariable regression model in the panel data set. The results showed that the cognitive and structural social capital indicators have a positive relationship with the financial status of business units. Therefore, social capital can have a decisive role in the business perspective and decision-making models of investors.

Keywords

Main Subjects

References

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Social Capital Management
Volume 6, Issue 3
October 2019
Pages 327-349

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