Trust radius and earnings surprises: With a humanistic approach to culture

79 Pages Posted: 19 Jul 2021

Date Written: July 16, 2021

Abstract

In global stock markets, I test a new measure of trust, national trust radius, and report
that it is better than the existing measure. In a country with larger trust radius, information
transmission is more efficient between earnings announcements and stock reactions. Tests based
on various windows of returns, re-calibrations of trust radius, 2SLS, and controls corroborate this
result. This tendency is most pronounced in Protestant regions, and least in Ex-Communist and
Confucian regions. A humanistic approach based on a textual interpretation of classical documents
(Luther, Marx, and Confucius) illumines why cultural regions have different widths of trust radius.

Keywords: Earnings forecasts, Information asymmetry, National culture, Trust, Humanistic approach

JEL Classification: F39, G14, G15, G29, N90

Suggested Citation

Choi, KS (Kyeong-Seop), Trust radius and earnings surprises: With a humanistic approach to culture (July 16, 2021). Available at SSRN: https://ssrn.com/abstract=3888482 or http://dx.doi.org/10.2139/ssrn.3888482

KS (Kyeong-Seop) Choi (Contact Author)

Culverhouse College Business ( email )

The University of Alabama
361 Stadium Dr.
Tuscaloosa, AL AL 35487
United States
2054547340 (Phone)

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