Do discriminatory leniency policies fight hard‐core cartels?

This paper experimentally analyzes the effects of nondiscriminatory and discriminatory leniency policies on hard‐core cartels. We design a mechanism to form a hard‐core cartel, which allows that multiple ringleaders emerge. Ringleaders often take a leading role in the coordination and formation of hard‐core cartels. A leniency policy that grants amnesty to all “whistle‐blowers” except for ringleaders may therefore reduce the incentive to become a ringleader and disrupt cartel formation. Yet, our experimental results show that whistle‐blowing rarely occurs. Paradoxically, the discriminatory leniency policy induces firms to become ringleaders. We find that firms create trust among other firms when acting as ringleaders. This signaling effect ultimately facilitates coordination in the explicit cartel.     

How do corporate environmental policy and corporate reputation affect risk‐adjusted financial performance?

The current study aims to answer dual, related questions: Does corporate environmental policy affect corporate reputation, and does this link also influence risk‐adjusted profitability and company's risk? With a comprehensive framework involving analyses of each question, among a sample of firms traced by the Reputation Institute, this study reveals several notable results, after correcting for endogeneity biases. First, environmental engagement and green product innovation are both antecedents of corporate reputation. Second, corporate reputation has a positive impact on risk‐adjusted profitability and Z score indicator of financial distress risk. Thus, corporate environmental responsibility and green practices represent cospecialized assets that enhances an intangible asset, namely, corporate reputation. The latter influence constitutes a missing link between sustainable development and the firm's financial performance. Overall, environmental engagement and corporate reputation act as insurance‐like protections of firm competitiveness.     

Firms and universities—do spillovers enhance firm’s performance?

This paper aims to assess if geographic proximity from universities enhances small firms’ performance, by means of knowledge spillovers. A sample of micro data is used on 390 manufacturing firms and 11 public universities in Portugal. Performance is measured by labour productivity. The estimation was made using OLS as well as Quantile Regression. Results seem to confirm that both domains of knowledge do produce distinct effects, but there is no evidence that a firm’s performance improves with the proximity to a university. Likewise, the quality of universities does not seem to influence the labour productivity of firms.

Do environmental,social, and governance activities improve corporate financial performance?

This study investigated the relationship between corporate efficiency and corporate sustainability to determine whether firms concerned about environmental, social, and governance (ESG) issues can also be efficient and profitable. We applied data envelopment analysis to estimate corporate efficiency and investigated the nonlinear relationship between corporate efficiency and ESG disclosure. Evidence shows that corporate transparency regarding ESG information has a positive association with corporate efficiency at the moderate disclosure level, rather than at the high or low disclosure level. Governance information disclosure has the strongest positive linkage with corporate efficiency, followed by social and environmental information disclosure. Moreover, we explored the relationship between particular ESG activities and corporate financial performance (CFP), including corporate efficiency, return on assets, and market value. We found that most of the ESG activities reveal a nonnegative relationship with CFP. These findings may provide evidence about voluntary corporate social responsibility strategy choices for enhancing corporate sustainability.     

R&D: the missing link between corporate social performance and financial performance?

Management Review Quarterly - The relationship between corporate social performance (CSP) and financial performance (CFP) has been analyzed for decades. Despite these efforts, the results remain...     

Do external diversity practices boost focal firm performance? The case of supplier diversity

Based on the resource-based view, we propose that external diversity practices such as supplier diversity may affect firm performance. We find that the relationship between supplier diversity and short-term performance (i.e. productivity) is moderated by context such that firms in declining industries experience positive productivity effects while firms in munificent industries witness negative effects. For longer-term profitability (i.e. Tobin's q), we do not find support for a positive relationship between supplier diversity and long-term performance. However, positive supplier diversity effects emerge in munificent environments. Overall, in support of the strategic human resource management approach, we conclude that the effect of external supplier diversity on firm performance is contingent upon environmental munificence, which documented the necessity to include supplier diversity as a relevant component of a comprehensive diversity and equality management system.     

Do board sustainability committees contribute to corporate environmental and social performance? The mediating role of corporate social responsibility strategy

The purpose of this study is to investigate the impact of board sustainability committees on environmental and social performance and to examine the mediating effect of corporate social responsibility (CSR) strategy on the relationship between the presence of board sustainability committees and corporate sustainability performance. Using data of U.K. listed firms for the period of 2009–2016, the study employs panel regression analysis and bootstrapping techniques to test study hypotheses. The results suggest that the presence of a sustainability committee improves the effectiveness of CSR strategies. The results also indicate that firms with effective CSR strategies exhibit better environmental and social performance. Further, the empirical results show that the effectiveness of CSR strategy explains the positive relationship between board sustainability committees and corporate environmental and social performance, thus supporting the theoretical framework of the study. The findings of the study shed new light on this research direction and could be of interest to board members, managers, practitioners, investors, policy makers, and regulators that plan to promote sustainability practices and strategies needed for sustainable development.     

Does corporate environmental responsibility engagement affect firm value? The mediating role of corporate innovation

This paper aims to construct a comprehensive corporate environmental responsibility (CER) engagement measurement to examine the relationship between CER engagement and firm value as well as explore the mediating effect of corporate innovation on this relationship based on a sample of 496 China's A‐share listed companies from 2008 to 2016. The results show that when firms start to adopt environmental regulations, CER would have a negative effect on firm value; however, at a specific level, CER would start to enhance firm value positively. In addition to this, corporate innovation plays a mediating role in the relationship between CER and firm value. Corporate innovation promotes firm value of firms with CER more than firms without CER. Overall, the findings of this paper are extremely relevant for the government, investors, and firm's managers and can be utilized for policy and investment decision making. Also, the findings encourage firms to enhance their sense of environmental responsibility in order to enhance their competitive advantages, enhance corporate innovation capabilities, and thus enhance firm value.     

Do financial penalties for environmental violations facilitate improvements in corporate environmental performance? An empirical investigation

Environmental regulations play an essential role in managing firm behavior and providing a reference point for the minimum standards of corporate environmental performance, yet certain firms fail to ensure their environmental performance meets these standards. This research focuses on public firms that the US government has penalized for violating environmental regulations and investigates whether these firms subsequently improved their environmental performance. Surprisingly, neither the receipt of a penalty for an environmental violation nor the imposition of a greater penalty was associated with improvements in environmental performance. Instead, a penalty for environmental violation predicted further, albeit mild, deterioration in environmental performance. While the existing literature has established that financial penalties deter most firms from committing environmental violations, this research contributes to this literature by revealing that these penalties fail to motivate firms that have violated environmental regulations to improve their environmental performance.     

Do salaries improve worker performance?

We establish the effects of salaries on worker performance by exploiting a natural experiment in which some workers in a particular occupation (football referees) switch from short-term contracts to salaried contracts. Worker performance improves among those who move onto salaried contracts relative to those who do not. The finding is robust to the introduction of worker fixed effects indicating that it is not driven by better workers being awarded salary contracts. Nor is it sensitive to workers sorting into or out of the profession. Improved performance could arise from the additional effort workers exert due to career concerns, the higher income associated with career contracts (an efficiency wage effect) or improvements in worker quality arising from off-the-job training which accompanies the salaried contracts.     

Do High‐Frequency Data Improve High‐Dimensional Portfolio Allocations?

This paper addresses the debate about the usefulness of high‐frequency (HF) data in large‐scale portfolio allocation. We construct global minimum variance portfolios based on the constituents of the S&P 500. HF‐based covariance matrix predictions are obtained by applying a blocked realized kernel estimator, different smoothing windows, various regularization methods and two forecasting models. We show that HF‐based predictions yield a significantly lower portfolio volatility than methods employing daily returns. Particularly during the 2008 financial crisis, these performance gains hold over longer horizons than previous studies have shown, translating into substantial utility gains for an investor with pronounced risk aversion. Copyright © 2013 John Wiley & Sons, Ltd.     

Which institutional investors matter for firm survival and performance?

Using data that spans three decades, we assess the diverse roles of institutional investors in impacting survival and performance of chronically underperforming firms and contrast the results for consistently overperforming firms. We find material differences in investor roles and investment returns between these samples. Differentiating among institutional types, controlling for prior performance and attrition bias provides insights unattainable by examining aggregated holdings. For underperformers, results are negative for activist pension funds and long-term institutions, positive for activist hedge funds and short-term institutions, and mixed for institutional blockholders.     

Does confidence enhance performance? Causal evidence from the field

We analyze the effect of self‐confidence on performance using data from top‐level professional biathlon competitions. We exploit this dual nature of the sport by using snow conditions affecting performance on the skiing track as exogenous variation in confidence on the shooting range. Using round‐level data on 254 competitions between 2009 and 2013, we show that the less confident athletes are, the worse their performance is on the shooting range. Effects for women are estimated to be generally smaller and less robust. We show that our results are not driven by fatigue or exhaustion specific to the competitive setting we analyze.     

Do Neighbours Influence Value‐Added‐Tax Introduction? A Spatial Duration Analysis

The spatial survival models typically impose frailties, which characterize unobserved heterogeneity, to be spatially correlated. However, the spatial effect may not only exist in the unobserved errors, but it can also be present in the baseline hazards and the dependent variables. A new spatial survival model with these three possible spatial correlation structures is explored and used to investigate the implementation of value‐added tax (VAT) in 99 countries over the period 1970–2009. Estimation is performed by a Bayesian approach through the Markov chain Monte Carlo method. The estimation results suggest the presence of a significant spatial correlation among the VAT introductions of neighbouring countries.     

Do investments in intangible customer assets affect firm value?

This paper develops a simple model of investment by service firms in intangible customer assets, and tests whether the model identifies some critical drivers of firms’ stock returns. Similar to firms with significant research and development (R&D) expenditures, we argue that firms in fast-growing service industries with few tangible assets can increase firm value by investing in customer acquisition and service (A&S) expenditure. Using a unique hand-collected data set, we show that per-customer changes in firms’ revenues, customer acquisition costs, and customer service costs help to explain their abnormal stock returns.     

Does adoption of ISO 56002-2019 and green innovation reporting enhance the firm sustainable development goal performance? An emerging paradigm

Reporting is a means of communication for companies to their respective stakeholders. The literature on non-financial reporting has mostly focused on operational, Carbon Discloser Project (CDP), and environmental disclosure to firm performance. This reporting and disclosure approach adopted by companies in their sustainability practices appears to be a normative approach. However, there has been a growing demand by stakeholders to incorporate proactive approach in business activities. To meet that, green innovation practices (GIPs) has been integrated as a new element in environmental reporting, thereby reflecting the proactiveness of companies in their adoption of green innovation reporting (GIR). The objective of this study is to advocate for greater disclosure on sustainability reporting by incorporating the GIPs of companies and substantial, sustainable development goal contribution, along with the moderation of the newly upgraded ISO 56002-2019 innovation management system. Adoption of green innovation reporting and ISO 56002-2019 will enhance the level of transparency of business activities and create greater stakeholder confidence along with enhancing the firm's sustainable development of goal performance. Furthermore, an extensive literature review was undertaken to create a GIR framework (i.e., product, process, service and technology) for firms to integrate GIPs into sustainability reporting. The conceptual model proposed the adoption of green innovation reporting and ISO 56002-2019 innovation management system to firm sustainable development goal. This needs to be injected into the sustainable reporting of companies to reflect their innovativeness, actual sustainable business practices and sustainable development goal performance for the firm.     

Do political parties matter for local land use policies?

Despite interest in the impact of land use regulations on housing construction and housing prices, little is known about the drivers of these policies. Conventional wisdom holds that homeowners have an influence on restrictive local zoning. In this paper, we contend that the party controlling local government might make a major difference. We draw on data from a large sample of Spanish cities for the 2003–2007 political term and employ a regression discontinuity design to document that cities controlled by left-wing parties convert much less land from rural to urban uses than is the case in similar cities controlled by the right. The differences between governments on the two sides of the political spectrum are more pronounced in places with greater population heterogeneity and in those facing higher housing demand. We also present evidence suggesting that these partisan differences might ultimately impact on housing construction and housing price growth.     

Do temporary agency workers affect workplace performance?

Using nationally representative workplace data we find the use of temporary agency workers (TAW) is positively associated with financial performance in the British private sector and weakly associated with higher sales per employee. However TAW is not associated with value added per employee. Employees in workplaces with TAW receive higher wages than observationally equivalent employees in non-TAW workplaces. But the presence of TAW in the employee’s occupation is associated with lower wages for employees in that occupation. Furthermore, conditioning on wages, the presence of TAW at the workplace is associated with lower job satisfaction and higher job anxiety among employees. These findings are consistent with TAW having an adverse effect on employees’ experiences at work, perhaps due a more labour intensive regime, one which is only partly compensated for with higher wages.     

Do Smaller Classes Always Improve Students’ Long‐run Outcomes?

We exploit the strict class size rule in Norway and matched individual and school register information for 1982–2011 to estimate long‐run causal effects on income and educational attainment. Contrary to recent evidence from the US and Sweden, we do not find any significant average effect on long‐run outcomes of reduced class size. We further use the large register data set and quasi‐experimental strategy to estimate whether the class size effect depends on external conditions facing students and schools, such as teacher quality, extent of upper secondary school choice, school district size, local fiscal constraints and labour market conditions. Overall, we find that the class size effect does not depend on these factors measured at the school district level. The absence of class size effects on long‐run outcomes in Norway is consistent with earlier findings for short‐run outcomes, using comparable data and empirical strategies.