Labour investment efficiency and social capital

Hasibul Chowdhury; Ashrafee Tanvir Hossain; Syka Rahman; Jiayi Zheng

doi:10.1111/acfi.70023

Labour investment efficiency and social capital

Hasibul Chowdhury, Ashrafee Tanvir Hossain, Syka Rahman, Jiayi Zheng

Department of Applied Finance

Research output: Contribution to journal › Article › peer-review

1 Citation (Scopus)

Abstract

This study explores the impact of social capital on where a firm is headquartered regarding its labour investment decisions. We show that firms located in counties with high levels of social capital avoid both overinvestment and underinvestment, and thus have more efficient labour investments. We also find that social capital, as an external factor that mitigates conflict, has a stronger effect on reducing inefficient labour investments when a firm is more likely to suffer from agency issues. Overall, our results show that social capital plays a vital role in increasing trust by reducing agency‐infused actions, therefore ensuring efficient investments in labour resources.

Original language	English
Pages (from-to)	2894-2917
Number of pages	24
Journal	Accounting & Finance
Volume	65
Issue number	3
DOIs	https://doi.org/10.1111/acfi.70023
Publication status	Published - Sept 2025

Bibliographical note

© 2025 The Author(s). Accounting & Finance published by John Wiley & Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher.

Keywords

agency conflicts
efficient labour investment
social capital

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10.1111/acfi.70023Licence: CC BY-NC-ND

Publisher version (open access)Final published version, 543 KBLicence: CC BY-NC-ND

Cite this

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Labour investment efficiency and social capital

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