Trade intensity,country size and corruption

Abstract. Several authors claim to provide evidence that governmental corruption is less severe in countries where trade intensity is higher or populations are smaller. We argue that theory is highly ambiguous on these questions, and demonstrate that empirical links between corruption and trade intensity – or country size, strongly related to trade intensity – are sensitive to sample selection bias. Most available corruption indicators provide ratings only for those countries in which multinational investors have the greatest interest: these tend to include almost all large nations, but among small nations only those that are well-governed. We find that the relationship between corruption and trade intensity disappears, using newer corruption indicators with substantially increased country coverage. Similarly, the relationship between corruption and country size weakens or disappears using samples less subject to selection bias. Received: July 2001 / accepted: April 2002 We thank Anand Swamy and two anonymous referees for helpful comments and suggestions, Paul Schorosch for able research assistance, and Ray Fisman, Roberta Gatti, Aart Kraay, and Shang-jin Wei for kindly providing data. The conclusions of this paper are not intended to represent the views of the World Bank, its Executive Directors, or the countries they represent.     

Corporate Reputation and Social Performance: The Importance of Fit

abstract    Utilizing data on a sample of large firms, we estimate a model of corporate reputation. We find reputation, derived from the assessments of managers and market analysts, to be determined by a firm's social performance, financial performance, market risk, the extent of long-term institutional ownership, and the nature of its business activities. Furthermore, the reputational effect of social performance is found to vary both across sectors, and within sectors across the various types of social performance. Specifically, our results demonstrate the need to achieve a 'fit' among the types of corporate social performance undertaken and the firm's stakeholder environment. For example, a strong record of environmental performance may enhance or damage reputation depending on whether the firm's activities 'fit' with environmental concerns in the eyes of stakeholders.     

A General Method of Deriving the Inefficiencies of Banks from a Profit Function

This article develops a new method of estimating inefficiencies in joint production and shows that unlike the approaches utilized in the previous studies of inefficiency, this method maintains a consistent relationship between the error term of a profit function and the error terms of its price derivatives. A useful by-product of the method is a proof of a Hotelling-like lemma that relates stochastic input demand and output supply functions to stochastic profit functions. While the previous studies fit a single frontier to data on all firms, this paper estimates a frontier unique to every observed firm to allow each one to have a different potential of achieving maximal levels of profit. The new method is applied in the analysis of annual data, 1984–1989, for U.S. commercial banks. Both the analytical and numerical results of the paper show that the residual that the previous studies attribute to inefficiency includes the effects of excluded variables and of inaccuracies in the specified functional forms. Once accurate estimates of these effects are subtracted from the residual, the distortions in the measured inefficiencies should be considerably reduced. Consequently, this article considers how such estimates might be obtained.     

The Development of Corporate Charitable Contributions in the UK: A Stakeholder Analysis

This paper investigates the determinants of corporate charitable donations within a comparative study of corporate behaviour in two time periods, 1989–90 and 1998–99. The analysis is based on a longitudinal data set that includes over 400 UK listed companies. The determinants of corporate charitable donations are explored within a stakeholder model and the relationship between corporate charitable donations and a set of firm and industry variables is estimated using OLS. Particular emphasis is placed on industry effects and the impact of social and environmental stakeholders. The results highlight a significant change in behaviour between 1989–90 and 1998–99 that may reflect a strategic response by corporate decision‐makers to external concerns over corporate social responsibility. In the early period corporate charitable donations were substantially determined by profits. However, this relationship has weakened during the 1990s as firms have become increasingly responsive to stakeholder influences. The results for the later period emphasize the increasing importance of corporate visibility, and the development of social and environmental influences on corporate charitable contributions.     

The relationship between major-league sports’ official sponsorship announcements and the stock prices of sponsoring firms

This study presents analysis of the impact of “official product” sports sponsorships with the National Football League (NFL), Major League Baseball (MLB), the National Hockey League (NHL), the National Basketball Association (NBA), and the Professional Golfers Association (PGA) on the stock prices of sponsoring firms. The primary finding of the study is that, in the main, announcements were accompanied by increases in shareholder wealth. The 53 sponsors analyzed experienced mean increases in stock valuations of about $257 million. A multiple regression analysis of firm-specific stock price changes and selected corporate and sponsorship attributes indicates that official product sponsorships with the NBA, NHL, and PGA and those with smaller market shares were associated with the largest gains in share prices. Although corporate cashflow (a proxy for agency conflicts) is statistically unrelated to shareholder approval, sponsorships by high-technology companies were associated with stronger stock price reactions than otherwise. Finally, product congruence with the sponsored sport was positively related to changes in stock prices. T. Bettina Cornwell (b.cornwell@business.uq.edu.au) is Professor of Marketing and Leader of the Marketing cluster in the UQ Business School at the University of Queensland, Australia. She was formerly Professor of Marketing in the Fogelman College of Business and Economics at the University of Memphis. She received her Ph.D. from the University of Texas. Her research focuses on promotion and consumer behavior, especially with regard to international and public policy issues. Other articles on the topic of sponsorship-linked marketing have recently appeared in theJournal of Advertising, the Journal of Advertising Research, theJournal of Business Research, andPsychology & Marketing. Stephen W. Pruitt (pruittst@umkc.edu) is the holder of the Arvin Gottlieb/Missouri Endowed Chair of Business Economics and Finance in the Henry W. Bloch School of Business and Public Administration at the University of Missouri-Kansas City. He received his Ph.D. from Florida State University. He has published more than 45 articles, most of which employ event study methodologies, in journals such as theJournal of Finance, theJournal of Political Economy, Financial Management, theJournal of Public Policy and Marketing, and theJournal of Advertising Research. John M. Clark (clarkj@cba.usm.edu) is an assistant professor of finance at the University of Southern Mississippi. He received his Ph.D. from the University of Alabama. His research interests include options and other derivatives, investments, and the impact of real events upon the stock prices of corporations. His work has appeared in scholarly outlets such as theJournal of Advertising Research, theFinancial Review, and theJournal of Business Ethics.     

Correction to: Earnings announcement return extrapolation

Review of Accounting Studies - A Correction to this paper has been published: https://doi.org/10.1007/s11142-021-09605-9     

Technological convergence, R&D, trade and productivity growth

This paper analyses productivity growth in a panel of 14 United Kingdom manufacturing industries since 1970. Innovation and technology transfer provide two potential sources of productivity growth for a country behind the technological frontier. We examine the roles played by research and development (R&D), international trade, and human capital in stimulating each source of productivity growth. Technology transfer is statistically significant and quantitatively important. While R&D raises rates of innovation, international trade enhances the speed of technology transfer. Human capital primarily affects output through private rates of return (captured in our index of labour quality) rather than measured TFP.