Can board environmental orientation improve U.S. firms' carbon performance? The mediating role of carbon strategy

Overwhelming evidence from prior research suggests a positive association between corporate board characteristics and carbon performance; however, very little is known about the mechanisms linking the two variables. This study attempts to fill this gap by developing and empirically testing a conceptual model that highlights the role of carbon strategy in the relationship between board environmental orientation (BEO) and carbon performance. We argue that BEO can directly and indirectly influence carbon performance through carbon strategy. Using structural equation modelling to analyse data consisting of 2,301 U.S. firm‐year observations over the 2005–2015 period, we find that the greater the BEO is, the better its carbon performance (i.e., lower greenhouse gas emissions). The results also provide evidence of the mediating effect of carbon strategy on the relationship between BEO and carbon performance. Splitting the sample into high and low carbon‐intensive industries shows a partial mediation effect in high carbon‐intensive industries and a full mediation effect in low carbon‐intensive industries. The findings of the study and its implications for scholars, policymakers, managers, investors, and environmentalists are discussed.     

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.     

Do buyer cooperative actions matter under relational stress? Evidence from Japanese and U.S. assemblers in the U.S. automotive industry

Buyers can create relational stress even as they work cooperatively with suppliers. This study investigates the moderating effects of relational stress on the ability of buyer-initiated cooperative actions to influence a supplier's willingness to invest in technology that will be of benefit to the buyer. Data on 2012 buying situations were collected from Tier 1 suppliers to three U.S. domestic automotive assemblers (Chrysler, Ford, and General Motors) and three Japanese transplant automotive assemblers (Honda, Nissan, and Toyota) over three consecutive years (2003–2005). The results indicate that (1) buyer-initiated cooperative actions of communication, assistance, and supplier involvement increase a supplier's willingness to invest in technology, (2) the relationship-enhancing effect of buyer assistance increases under high relational stress, while the effectiveness of buyer communication decreases, and (3) that the effect of supplier involvement is not significantly influenced by relational stress levels. Furthermore, we found that supplier relations with Japanese transplant assemblers are characterized by higher levels of cooperative actions, lower levels of relational stress, and higher levels of supplier willingness to invest in technology when compared to those of U.S. domestic assemblers.     

The impact of government intervention on the stabilization of domestic financial markets and on U.S. banks’ asset composition

The 2007–2009 financial crisis that evolved from various factors including the housing boom, aggressive lending activity, financial innovation, and increased access to money and capital markets prompted unprecedented U.S. government intervention in the financial sector. We examine changes in banks’ balance sheet composition associated with U.S. government intervention during the crisis. We find that the initial round of quantitative easing positively impacts bank liquidity across all bank samples. Our results show a positive impact of repurchase agreement market rates on bank liquidity for small and medium banks. We conclude that banks have become more liquid in the post-crisis period, especially the larger banks (large and money center banks). We show that real estate loan portfolio exposures have reverted to pre-crisis levels for money center banks and remained flat for all other bank samples.     

Do banking shocks matter for the U.S. economy?

The quantitative significance of shocks to the financial intermediary (FI) has not received much attention up to now. We estimate a DSGE model with what we describe as chained credit contracts, using Bayesian technique. In the model, credit-constrained FIs intermediate funds from investors to credit-constrained entrepreneurs through two types of credit contract. We find that the shocks to the FIs' net worth play an important role in the investment dynamics, accounting for 17% of its variations. In particular, in the Great Recession, they are the key determinants of the investment declines, accounting for 36% of the variations.     

How can big data enhance the timeliness of official statistics?: The case of the U.S. consumer price index

The daily consumer price index (CPI) produced by the Billion Prices Project (BPP CPI) offers a glimpse of the direction taken by consumer price inflation in real time. This is in contrast to the official U.S. CPI, which is compiled monthly and released with an average of a three-week delay following the end of the reference month. A recent body of research contended that the movements of online prices are representative of those of offline retail prices, making the BPP CPI a natural candidate for accurately improving the timeliness of the official CPI. We assess the predictive content of the BPP CPI using a variety of MIDAS models that accommodate data sampled at different frequencies. These models generate estimates that remain robust to the variety of time periods considered and, by the standard of the existing literature, contribute to a significant upgrade in the forecast accuracy of official consumer price inflation figures. The paper then sketches the broad implications of BPP CPI for the consumer price statistics maintained by national statistics offices and discusses how the proposed improvement in the timeliness of the official CPI fits in this perspective.     

How terrorism affects the economic performance? The case of Pakistan

We examine application of the Economics of Crime Monitoring Model (ECM-Model) Ruiz Estrada and Ndoma (J Policy Model 36:867–882, 2014) on Pakistan terrorism activities. The application of ECM-Model is used to evaluate the impact of terrorism on the economic performance of Pakistan economy. First part of the research work is related to introduction and background of study. The second section is associated with the theoretical and conceptual frame work that explains how terrorism affects the economy. The third part of the paper describes the methodology of the model. The fourth part of this research paper elaborates the results of the study. The second last part of the paper is the econometrics techniques and results which support the model and last part of the research work is conclusion and recommendations.     

Measuring real–financial connectedness in the U.S. economy

We analyze the connectedness between the real and the financial sectors of the U.S. economy. Using the weekly ADS index of the Philadelphia Fed (the widely used business conditions indicator) to represent the real side, we find that during times of financial distress and business cycle turning points, the direction of connectedness runs from the real sector to financial markets. The ADS index is derived from a model containing a measure of term structure along with real variables. Therefore, it might not be the best representative of the real activity used in the connectedness analysis. As an alternative, we derive a real activity index (RAI) from a dynamic factor model of the real sector variables only. The behavior of RAI over time is quite similar to that of the ADS index. When we include RAI to represent the real side, connectedness from the real side to financial markets weakens substantially, while the connectedness from financial markets to the real side becomes more pronounced.     

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.     

The impact of innovation on companies’ cross-border mergers and acquisitions: evidence from China

Quality & Quantity - This paper contributes to the literature on the effects of companies’ current innovation capability on cross-border M&A initiation decisions by providing...     

The effect of mergers on firms’ costs: evidence from the HMO industry

We examine the effect of mergers on firms’ costs, using a national data set that contains information on both pre- and post-merger costs for firms in the Health Maintenance Organization (HMO) industry. By utilizing data on all HMOs that operated in the United States from 1985 to 1997, we observe enough mergers to obtain estimates of both short-run and relatively permanent merger effects. On average, we do not find evidence that mergers allowed HMOs to realize greater economies of scale or that mergers improved efficiency by shifting the cost function. On the other hand, mergers between HMOs that produce Medicare and other products are likely to create dis-economies of scope that increase costs.     

Do minimum wages raise employment? Evidence from the U.S. retail-trade sector

This paper examines the impact of minimum wages on earnings and employment in selected branches of the retail-trade sector, 1990–2005, using county-level data on employment and a panel regression framework that allows for county-specific trends in sectoral outcomes. We focus on specific subsectors within retail trade that are identified as particularly low-wage. We find little evidence of disemployment effects once we allow for geographic-specific trends. Indeed, in many sectors the evidence points to modest (but robust) positive employment effects.     

The ‘COVID’ crash of the 2020 U.S. Stock market

We employed the log-periodic power law singularity (LPPLS) methodology to systematically investigate the 2020 stock market crash in the U.S. equities sectors with different levels of total market capitalizations through four major U.S. stock market indexes, including the Wilshire 5000 Total Market index, the S&P 500 index, the S&P MidCap 400 index, and the Russell 2000 index, representing the stocks overall, the large capitalization stocks, the middle capitalization stocks and the small capitalization stocks, respectively. During the 2020 U.S. stock market crash, all four indexes lost more than a third of their values within five weeks, while both the middle capitalization stocks and the small capitalization stocks have suffered much greater losses than the large capitalization stocks and stocks overall. Our results indicate that the price trajectories of these four stock market indexes prior to the 2020 stock market crash have clearly featured the obvious LPPLS bubble pattern and were indeed in a positive bubble regime. Contrary to the popular belief that the 2020 US stock market crash was mainly due to the COVID-19 pandemic, we have shown that COVID merely served as sparks and the 2020 U.S. stock market crash had stemmed from the increasingly systemic instability of the stock market itself. We also performed the complementary post-mortem analysis of the 2020 U.S. stock market crash. Our analyses indicate that the probability density distributions of the critical time for these four indexes are positively skewed; the 2020 U.S. stock market crash originated from a bubble that had begun to form as early as September 2018; and the bubble profiles for stocks with different levels of total market capitalizations have distinct temporal patterns. This study not only sheds new light on the makings of the 2020 U.S. stock market crash but also creates a novel pipeline for future real-time crash detection and mechanism dissection of any financial market and/or economic index.     

Do institutions affect the matching process of disabled people? The Italian case

The aim of this paper is to investigate whether the various Italian regions’ efficiency in providing employment for disabled people under Law 12 March n.68 1999, “Regulation on the right to work of disabled people” (Law 68/99) can be affected by their institutional quality. For this reason, a Stochastic Frontier Approach is used for estimating the regional matching function, where the flow of disabled people who found a job is produced by the combination of unemployment and vacancies. The matching equation is estimated using regional data from ISFOL, from 2006 to 2011. Results show the presence of a territorial dualism with regard to the matching process. The Southern regions of Italy have the lowest efficiency scores due to their lower institutional quality. The empirical analysis confirms that a good institutional quality is able to reduce the inefficiency of the matching process of disabled people. Therefore, it requires the implementation of policies aimed at improving the level of institutions, particularly in Southern Italy, in order to improve the efficiency of Law 68/99.

     

Job rotation and employee performance – evidence from a longitudinal study in the financial services industry

Job rotation, i.e. a lateral transfer of an employee between jobs within a company, is frequently used as a means to develop employees, learn about their abilities as well as to motivate them. We investigate the determinants and performance effects of job rotation empirically by analyzing a large panel data-set covering the German banking and financial services sector. In particular, we study (i) how prior individual performance affects the propensity to rotate and (ii) how performance changes after the rotation. We find that while both, low- and high-performers rotate, lateral moves are more frequent among low performers. However, those having been rotated between jobs achieve a higher performance in subsequent years as compared to other non-rotating employees in a comparable position. Interestingly, this effect is driven by high performers, whereas for low performers, we find no significant relationship between job rotation and future performance. The results thus suggest that firms should focus their job rotation programs on high performers and should not expect that low performers achieve performance gains when being rotated to a different function.     

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...     

How does inter-industry spillover improve the performance of volatility forecasting?

This study aims to investigate whether introducing inter-industry spillover information into the GARCH-MIDAS model improves out-of-sample forecasting attempts. We explore the transmission of volatility across sectors, as well as the reliance on inter-industry business links. Our findings demonstrate strong cross-industry volatility spillovers that are related to the degree of the industry-to-industry trading linkage. We compare the out-of-sample volatility forecasting performance of the spillovers-information-incorporated GARCH-MIDAS model with that of the traditional GARCH model. The empirical results show that the GARCH-MIDAS model outperforms traditional GARCH models. Notably, we discover that good (bad) news is always transferred from the back end of the production process to the front end, meaning that economic growth (decline) is driven by consumption expansion (shrinkage).     

Predictability of tail risks of Canada and the U.S. Over a Century: The role of spillovers and oil tail Risks☆

We examine the tail risk spillovers between Canada and U.S. stock markets using over a century data, and also account for the roles of tail risks of other advanced economies (France, Germany, Japan, Italy, Switzerland, and the UK) and oil-market tail risk. We use the “best” tail risk measure obtained from different variants of the Conditional Autoregressive Value at Risk (CAViaR) model developed by Engle and Manganelli (2004) in the predictive model and compare its performance with that of an AR(1) benchmark model. We find strong evidence of risk spillovers between the two stock markets. We find contrasting evidence for the predictability of oil-market tail risk, with positive predictability in case of the net oil exporter and negative in case of the net oil importer. Further results using tail risks of other advanced economies (combined) support possible diversification potential for Canadian stocks in the presence of market risks of advanced economies other than the U.S. Our findings have implications for investors and are robust to various out-of-sample forecast horizons, alternative data frequencies, data splits, and 1% and 5% VaRs.     

Can interfirm trust improve firms' cooperation on environmental innovation? The moderating role of environmental hostility

Based on the logic of “trust‐behavior,” we examined the relationship between interfirm cognitive trust, emotional trust, and firms' cooperation on environmental innovation, as well as the moderating role of environmental hostility on the relationship between two dimensions of interfirm trust and cooperation on environmental innovation. Data for the study were collected from 216 firms in China. The results indicated that both interfirm cognitive trust and emotional trust were positively correlated to firms' cooperation on environmental innovation, and the effect of emotional trust on firms' cooperation on environmental innovation was negatively moderated by environmental hostility. Finally, the results were discussed and future directions put forward.     

Do U.S. macroeconomic surprises influence equity returns? An exploratory analysis of developed economies

Given the dominant role the U.S. economy plays in global trade, we explore how U.S. macroeconomic surprises affect stock markets in ten major developed economies as well as in China and India. We do not find strong enough evidence to conclude that U.S. macro shocks materially and consistently influence equity returns and volatilities in the economies studied. Consistent with previous research, it appears that only in few markets are return levels materially influenced by macro surprises generated in the U.S. Also, only a small number of macro shocks seem to be of any consistent significance. For returns levels, inflation, productivity, consumer confidence, and retail sales seem to matter. At the same time, conditional volatilities appear to be influenced by inflation, retail sales, durable goods, industrial production, consumer confidence, gross domestic product, and trade balance surprises. Finally, our exploratory analysis indicates that the degree of bilateral trade connectedness may partially explain the extent to which macroeconomic surprises are transmitted across countries.