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

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