SOCIAL CONFORMITY WITHIN FIRMS AND TOP MANAGEMENT INFORMATION QUALITY
This paper examines the relation between social conformity within firms and the quality of top management’s information. Using a novel dataset of Google reviews, I construct a proxy for social conformity and find that it is negatively associated with both the frequency and the likelihood of management earnings forecasts, indicating that social conformity reduces the quality of top management’s information. Cross-sectionally, the negative effects of social conformity are stronger when top management engages in more internal communication and weaker when top management has greater access to external information sources. Moreover, social conformity is negatively associated with the likelihood and informativeness of corporate earnings conference calls. The exogenous shock of the Dodd-Frank rollback provides further evidence supporting causal inferences. Overall, this paper emphasizes the harm of social conformity on within-firm information flow.