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Social trust, financial constraints, and enterprise information disclosure

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  • Cao, Yanming
  • Xue, Yonggang
  • Tan, Yichu

Abstract

Based on data from China's A-share listed firms between 2014 and 2023, this study empirically examines the impact of social trust on corporate information disclosure quality and its underlying mechanisms. The findings reveal that regional social trust significantly enhances firms' information disclosure quality. Further analysis demonstrates that financial constraints play a partial mediating role in the relationship between social trust and disclosure quality: Social trust mitigates financing constraints by strengthening firms' willingness to provide information and reputational constraints, thereby incentivizing greater resource allocation to optimize disclosure practices. This creates a virtuous cycle of "trust-financing-disclosure." Heterogeneity analysis shows that state-owned enterprises (SOEs) exhibit stronger sensitivity to social trust, with their disclosure quality being significantly more responsive to social trust than private enterprises. This disparity is attributed to SOEs' stronger collectivist interest orientation and reputational mechanisms.

Suggested Citation

  • Cao, Yanming & Xue, Yonggang & Tan, Yichu, 2025. "Social trust, financial constraints, and enterprise information disclosure," Finance Research Letters, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:finlet:v:83:y:2025:i:c:s1544612325009109
    DOI: 10.1016/j.frl.2025.107651
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