Does managerial networking impinge our morality in Guanxi context? The moderating effect of corruption perception

This study explores the relationship between managerial networking and corporate morality in a guanxi context where personal relationship is widely used for organizational purposes. Using a sample of 6361 Chinese private firms, we find a significantly positive relationship between managerial networking and corporate social responsibility, including corporate charitable donations and environmental protection, and an insignificant relationship between managerial networking and the prevalence of business bribery. We also find that such relationships depend on corruption perception, that is, when corruption perception is high, the negative effects of managerial networking are more likely to rise but the positive effects of managerial networking are more likely to be weakened. These results are robust and consistent across various measurements and models.     

Does Institutional Blockholder Short‐Termism Lead to Managerial Myopia? Evidence from Income Smoothing

We examine institutional blockholders’ influence on income‐smoothing practices in the Korean market, which provides an interesting setting where family‐oriented chaebols dictate the corporate landscape and impede shareholder activism. The empirical results reveal that institutional shareholders with a short‐term (long‐term) investment horizon facilitate (constrain) managerial myopia. This positive (negative) association is most evident among firms with domestic institutional investors. Therefore, we argue that the presence of domestic institutional investors with transient investment goals incentivizes firms’ management to smooth out earnings.     

Corporate governance,globalization and firm productivity

We examine the relationship between globalization, corporate governance and firm productivity. The results, using longitudinal data from Korea, indicate that the positive effect of liberalising equity ownership on firms’ total factor productivity (TFP) was reinforced by indirect managerial effects when a firm improved its corporate governance. Our findings also confirm that the interaction of the managerial effect with increased foreign equity ownership is more significant than interaction with exports, suggesting that liberalising foreign investment in the host market is more effective in capitalising on the potential benefits of corporate governance reform than increasing exports to overseas markets, reflected in learning by exporting.     

Strategic choice during economic crisis: Domestic market position,organizational capabilities and export flexibility

This study examines how sudden shrinkage of domestic demand affects firm-level export performance. Using the Asian economic crisis as a natural experiment, we show that while the industrial organization (IO) economics and resource-based view (RBV) apply well in the pre-crisis period, the real options perspective does a better job in explaining firms’ efforts to increase exports in the post-crisis period. Specifically, using a real options perspective, we show how sudden change in domestic demand provides benefits to those firms that have invested in flexible capabilities while those firms that are locked in with inflexible resources fail to change. We find that the positive relationship between a firm's domestic market position and export intensity becomes stronger in the post-crisis than the pre-crisis period. Further, we find a positive relationship between non-location-bound flexible capabilities such as R&D and export intensity and a negative relationship between location-bound inflexible capabilities such as advertising and export intensity. These relationships become more pronounced in the post-crisis period.     

Managerial ownership,diversification, and firm performance: Evidence from an emerging market

Numerous existing studies have explored the impact of corporate diversification on firm performance, whereas considerably less research has investigated the inter-relationships among managerial ownership, diversification, and firm performance. This paper develops several hypotheses based on the agency theory self-interest perspective and tests the relationships among managerial ownership, corporate diversification, and firm performance using a sample of 98 emerging market firms listed on the Taiwan Stock Exchange. The results show a U-shaped relationship between managerial ownership and corporate diversification, similar to that found in prior studies. However, the inflection point is 33.17%, which is lower than that found in previous studies. Moreover, in contrast to prior results, corporate diversification is found to be positively associated with short-term firm performance and bears no relationship with mid-term firm performance, while firms engaged in unrelated diversification outperform those engaged in related diversification. This paper concludes with theoretical implications and suggestions for future research.     

Debt source choices and stock market performance of Russian firms during the financial crisis

This paper examines the relationship between stock returns and the sources of corporate debt during the financial crisis of 2008. In particular, using data on large-capitalization Russian firms, we investigate whether dependence on either bank debt or bonds affected stock returns during the credit crunch. Our results indicate that the firms which rely entirely on bank debt significantly outperformed the firms with public debt amidst the crisis. This finding suggests that bank debt may be particularly valuable in harsh times. However, we also document that the stock prices of the bank dependent firms recovered more slowly in the post-crisis period.     

Institutional investors' corporate site visits and corporate investment efficiency

This study examines the association between institutional investors' corporate site visits (CSVs) and the visited firms' investment efficiency. Using unique CSVs' data from China, this study provides empirical evidence that institutional investors' CSVs lessen the visited firms' corporate investment inefficiency, including both over- and underinvestment. The negative relationship between CSVs and investment inefficiency is less pronounced for firms with higher quality financial reporting and better corporate governance. In addition, CSVs show a decrease in corporate overinvestment by monitoring the risk-taking activities of younger CEOs and expansionary firms, and supervising the use of excess free cash flows. Meanwhile, CSVs could mitigate underinvestment by reducing managerial shirking from entrenched CEOs, such as dual or longer-tenured CEOs. The possible economic mechanism behind this association is that CSVs increase institutional shareholding percentages. All the main findings are robust to a battery of endogeneity and robustness tests.     

A Firm-level Examination of the Exports Puzzle: Why East Asian Exports Didn't Increase After the 1997–1998 Financial Crisis

We analyse a detailed panel dataset on Indonesian manufacturing firms to characterise the exports puzzle: the surprising absence of export-led growth after the massive currency devaluation during the 1997–1998 Asian financial crisis. Our results show that, consistent with trade theory predictions following better terms of trade, entry into export markets increased dramatically. In conflict with the same predictions, however, many pre-crisis exporters quit exporting. Thus stagnant export growth cannot be attributable to a lack of entrepreneurial ambition or activity amongst would-be exporters. Rather, it apparently resulted from constraints prohibiting continued exporting by pre-crisis exporters. Managerial reports of perceived constraints reveal little about why so many firms ceased exporting. However, ‘better’ firms, as proxied by foreign ownership, involvement in research and development, or investment in training, were more likely to continue exporting post-crisis.     

What Makes a Business Ethicist? A Reflection on the Transition from Applied Philosophy to Critical Thinking

Using a sample of 21,030 US firm-year observations that represents more than 3000 individual firms over the 1998–2012 period, we investigate the relationship between Corporate Social Responsibility (CSR) and investment efficiency. We provide strong and robust evidence that high CSR involvement decreases investment inefficiency and consequently increases investment efficiency. This result is consistent with our expectations that high CSR firms enjoy low information asymmetry and high stakeholder solidarity (stakeholder theory). Moreover, our findings suggest that CSR components that are directly related to firms’ primary stakeholders (e.g. employee relations, product characteristics, environment, and diversity) are more relevant in reducing investment inefficiency compared with those related to secondary stakeholders (e.g. human rights and community involvement). Finally, additional results show that the effect of CSR on investment efficiency is more pronounced during the subprime crisis. Taken together, our results highlight the important role that CSR plays in shaping firms’ investment behaviour and efficiency.     

Does corporate advertising work in a crisis? An examination of inoculation theory

The primary purpose of this paper is to propose a conceptual framework of consumer evaluation of corporate advertising in a corporate crisis. It also suggests future research propositions by investigating how the so-called inoculation effect from pre-crisis corporate advertising influences consumer response to corporate advertising during a crisis. First, the paper describes how the inoculation effect confers resistance to negative news in a corporate crisis. Next, the paper determines whether the inoculation effect further reduces consumer resistance to corporate advertising during a crisis. Other factors that figure into the broader context of corporate crises are then discussed. These include four other types of external impacts on a crisis situation – the crisis, the corporation, the media, and individual differences. The article concludes with implications for research and practice.     

Employee Protection and Corporate Innovation: Empirical Evidence from China

Through an analysis of survey data gathered from private firms in China, this study examines the impact of employee protection on corporate innovation ability. The results indicate that firms with more advanced employee protection have stronger innovation ability. Furthermore, the positive relationship between employee protection and corporate innovation ability is more pronounced in those enterprises with labor unions. Finally, a firm’s political connections strengthen the influence of employee protection on corporate innovation. These empirical findings highlight the positive consolidating effects of labor unions and political connections and will be of value to policy makers in emerging markets in gauging the important drivers of corporate innovation ability.     

The World Capital Markets’ Perception of Sustainability and the Impact of the Financial Crisis

Using a unique dataset provided by the international rating agency GES^®, we investigate the effects of corporate sustainability and industry-related exposure to environmental and social risks on the market value of MSCI World firms. The results show a negative relationship in the earlier years of our sample period. However, the analysis reveals that the capital market perception of sustainability has changed owing to the financial crisis. Looking at the height of the crisis in September 2008, the month in which Lehman Brothers shocked the world’s capital markets by filing for Chapter 11 bankruptcy protection, we find that the previously negative perception of corporate sustainability across its various dimensions was positively affected and offset. In addition, as a moderated regression analysis shows, the crisis led to a positive perception of corporate sustainability in industries that are exposed to higher environmental and social risks. Our study has the practical implication that executives, in particular in industries with high environmental and social risks, should increase their commitment to corporate sustainability due to the changes in the institutional setting triggered by the financial crisis.     

Chief executive officer ability and corporate environmental sustainability information disclosure

This study explores the impact of CEO ability on corporate environmental sustainability information disclosure. We take samples from Chinese A-share listed companies from 2010 to 2019 and use the ordinary least squares as a baseline regression model to check the relationship between CEO ability and corporate environmental sustainability information disclosure. Our findings are robust to different corporate environmental sustainability information disclosure measures and CEO ability. We found a positive association between CEO ability and corporate environmental sustainability information disclosure; thus, firms with a more able CEO are more likely to disclose more corporate environmental sustainability information. Our results also found a significant negative interaction coefficient between CEO ability and CEO career concerns. As the CEO grows older, his/her ability decreases; therefore, corporate environmental sustainability information disclosure reduces. Furthermore, we document that a female CEO strengthens the relationship between CEO ability and corporate environmental sustainability information disclosure. The study results are important for understanding corporate environmental responsibility development and implementation, particularly in China.     

Corporate giving in Taiwan: agency cost theory vs. value enhancement theory

This article examines the determinants of corporate giving (CG) in Taiwan according to agency cost (AC) and value enhancement (VE) theories. Panel regression test results reveal several new and interesting pieces of evidence. First, VE determinants outweigh AC determinants in explaining CG there. Second, the positive link between the current CG ratio (CGR) and the lagged CGR (CGR(-1)) suggests the consistent nature of CG. Third, after the global financial crisis in 2008, the influence of debt leverage on CGR vanished, but the impact of managerial insiders’ shareholdings on CGR became significant. Last, the influences of VE determinants and CGR(-1) on CGR remain during both pre-crisis and post-crisis periods. Moreover, after the crisis, CG was still motivated to create current value for shareholders, and was apparently used as a business strategy to signal companies’ financial or managerial stability.     

Leader narcissism and outward foreign direct investment: Evidence from Chinese firms

Researchers use the upper echelons theory to establish how leaders’ attributes affect firms’ outward foreign direct investment (OFDI), a proxy for foreign operations. This extant literature has largely ignored the impact of leaders’ psychological attributes, particularly, narcissism. We use a narcissism index of leaders of Chinese listed companies to examine the relationship between leader narcissism and firm-level OFDI for the period 2007-2017. We show that leader narcissism has a positive and significant impact on firm-level OFDI. In addition, we find that firms with state ownership and political connections show a greater positive effect of leader narcissism on the firm’s OFDI. Our results suggest that leader narcissism appears to be a stimulus to corporate OFDI, and thus in recruiting top corporate executives who are responsible for managing the international investments of the corporation, this psychological trait should be given special consideration in addition to other qualifications.     

How CSR Leads to Corporate Brand Equity: Mediating Mechanisms of Corporate Brand Credibility and Reputation

The purpose of this study is to investigate the relationships among corporate social responsibility (CSR), corporate brand credibility, corporate brand equity, and corporate reputation. Structural equation modeling analysis provided support for the hypotheses from a sample of 867 consumers in South Korea. The results showed that CSR has a direct positive effect on corporate brand credibility and corporate reputation. In addition, the results indicate that corporate brand credibility mediates the relationship between CSR and corporate reputation. Moreover, corporate brand credibility mediates the relationship between CSR and corporate reputation. Finally, the relationship between CSR and corporate brand equity is sequentially and fully mediated by corporate brand credibility and corporate reputation. The theoretical and managerial implications of the results and limitations are discussed, and future research directions are suggested.     

Modeling Job Pursuit Intention: Moderating Mechanisms of Socio-Environmental Consciousness

Many scholars have suggested the relationship between corporate social performance and its ability to attract a large number of high-quality job applicants, because previous literature indicates that employees with strong social awareness help create a high-performance organization. For that reason, an important issue for successful business recruitment is how to boost the pursuit intention of job seekers. This study discusses such issue by proposing a model based on signaling theory and cognitive dissonance theory. In the proposed model of this study, the positive relationships between four dimensions of corporate social performance and job pursuit intention are hypothetically moderated by socio-environmental consciousness. The proposed hypotheses of this research were empirically tested using the data from graduating students seeking a job. The empirical findings of this study complement previous literature by discussing how corporate social performance benefits business firms from a perspective of strengthened human resources and recruitment. Finally, managerial implications for business managers based on the findings herein are provided.     

Board Diversity and Managerial Control as Predictors of Corporate Social Performance

While it is widely assumed that greater diversity in corporate governance will enhance a firms corporate social performance, this study considers an alternative thesis which relates managerial control to corporate philanthropy. The study empirically evaluates both board diversity and managerial control of the board as possible predictors of corporate philanthropy. The demonstration of a positive relationship between managerial control and corporate philanthropy contributes to our understanding that corporate social performance results from a complex set of economic and social motives. Possible future research and managerial implications are discussed.     

Did Investors Herd during the Financial Crisis? Evidence from the US Financial Industry

We examine the herding behavior of investors in the US financial industry, especially commercial banks, S&Ls, investment and insurance firms during global financial crisis of 2008 towards own sub‐sector and market consensus using augmented cross sectional absolute deviation of returns (CSAD) model. After distinguishing between fundamental and non‐fundamental information, we find a greater influence of global financial crisis on spurious herding for commercial and investment banks, and such herding increases in the down market and with conditional volatility of returns, but adverse herding is prevalent among investors during normal period in response to fundamental information. We also find that herding intensity on fundamental information is relatively high with market consensus for all financial institutions except insurance firms in high volatility regime, and intentional herding is only significant and limited to S&Ls and investment banks in high volatility regime. Our findings suggest limited spillover effects of herding when investors face non‐fundamental information.     

Do Lenders Value Corporate Social Responsibility? Evidence from China

Drawing on risk mitigation theory, this article examines whether the improvement of firms’ social performance reduces debt financing costs (CDFs) in China, the world’s largest emerging market. Employing both the ordinary least square (OLS) and the two-stage instrumental variable regression methods, we find that improved corporate social responsibility (CSR) reduces the CDF when firms’ CSR investment is lower than an optimal level; however, this relationship is reversed after the CSR investment exceeds the optimal level. Firms with extremely low or extremely high CSR are subject to a higher CDF. The results also suggest that the optimal CSR level for small firms is higher than that for large firms. This study is the first to document a U-shaped relationship between CSR and CDF and also the first to investigate this relationship within an emerging market context.