How does CSR disclosure affect dividend payments in emerging markets?

This article examines the nexus between corporate social responsibility disclosures (CSRD) and dividend payout decisions in the context of emerging markets. Using hand-collected sample of listed firms from India, China, Indonesia, Pakistan, Malaysia, Korea, Turkey, and Russia over the period 2010–2018, our results show that CSR disclosures exert a negative impact on corporate dividend payments. Further, this effect is more prevalent for firms having higher institutional ownership. However, the results remain unaffected by the differences in legal origin i.e. civil law or common law, of the sample countries. Further, our main results are supported by a number of sensitivity tests, including reduced sample size, alternative dividend payment measures, and estimation techniques.     

Why emerging markets?

The substantial returns promised by developing country stock markets have attracted very significant capital flows. The phenomenon began with the rapid growth rates of countries on the Pacific Rim duirng the early 1980s, and today continues to grow in Latin America. Kuczynski asserts that the days when investing was like shooting fish in a barrel are over, but the so-called emerging capital market phenomenon is here to stay—it is simply part and parcel of new economic growth and development.     

Do low involved brands have better consumer perception due to product placement in emerging markets?

The purpose of this paper is to examine the role of the product placement in the film on purchase intention, attitude and change in perception. For this study, we selected recently released film and interviewed the film goers after he came out of the theatre through intercept technique. The products have improved brand recall, perception, and brand recommendation, ‘feeling’ towards brands, association and purchase intentions which are our dependent variables in our study. Brand image, country image, value for money and culture affects these dependent variables as per our present study. Low involved products get more mileage from product placement. The effect of product placement in low and high involved brand is explained for the first time through application alternative hierarchy’s theory of Ray et al., Theory of Hovland et al. and Gestalt theory of familiarity. Our paper bridges the gap between theory and practice by suggesting improvement in product placement in non –traditional media like film.     

What drives financial crises in emerging markets?

The study examines the causes of financial crises in 31 emerging market countries during 1980–2001. It estimates a probit model using 23 macroeconomic and financial sector variables. Traditional variables such as unemployment and inflation, as well as several indicators of indebtedness such as private sector liabilities and the foreign liabilities of banks explain currency crises rather well, and it appears currency crises occur in tandem with banking crises. Indeed, in emerging market countries the vulnerability to crisis is exacerbated by situations involving large liabilities that permit sudden capital outflows. Increases in indebtedness followed the liberalization of capital flows and domestic financial sectors.     

Do investors value the nonfinancial disclosure in emerging markets?

This paper studies the impact of the nonfinancial disclosure on firm value for a large sample of Indian firms, arguably emerging market with poor investor protections and legal enforcement. We proxy the nonfinancial disclosure by the Bloomberg score on the extent of a firm's Environmental, Social, and Governance disclosures, and find positive valuation effects associated with the nonfinancial disclosure. We find the nonfinancial disclosure is more valuable to standalone firms compared to business group firms. This paper shows that the positive valuation effects associated with the nonfinancial disclosure are attributable to lower cost of funds and higher operating cash flows.     

Follow my leader? Lookalike retailer brands in non-manufacturer-dominated product markets in the UK

Retailer brands are a common feature of most retail sectors today, and have made an important contribution to the financial performance of Britain's retailers. Over the past two decades, as retailers have adopted the marketing approach in their business activities, the nature and role of retailer brands in marketing strategies has changed. This paper reviews the development of retailer brands in the grocery market, from their original position as product alternatives to leading manufacturer brands, to brand alternatives in their own right. Part of this transformation has involved a revision of the packaging and presentation of these product ranges and this has led to accusations of copy-catting and theft of brand identity. The paper then explores the lookalike debate and reports on an exploratory study of retail brand recognition and the lookalike situation in those product markets which are not dominated by established manufacturer brands.     

How do local and foreign firms compete? Competitive actions in an emerging economy

When foreign and local firms compete, they face competitors acting quite differently from themselves. Specifically, their ability to engage in timely and frequent actions is influenced by, respectively, the Liability of Foreignness (LoF) and the Liability of Localness (LoL). We explore how the trade-off between LoF and LoL influences the aggressiveness of competitive actions firms take in emerging markets. Specifically, we argue that LoF results in weaker government ties that inhibit the aggressiveness of competitive actions of multinational subsidiaries, while LoL results in weaker technological capabilities that inhibit competitive aggressiveness of domestic firms. We apply structural equation modelling on Chinese survey data to test hypotheses derived from these arguments and find empirical support. Our results shed new light on competitive dynamics in an emerging economy.     

Is marketing agility important for emerging market firms in advanced markets?

Marketing agility has recently gained the attention of international marketing managers and scholars. However, scholars have not examined how this capability directly and indirectly influences firm performance and how the effects change under the complex market conditions facing emerging market (EM) firms in advanced economy (AE) markets. Hence, underpinned by the dynamic capability and complexity theories, this study investigates the direct effect of marketing agility—a dynamic meta-capability involving market sensing, speed, flexibility and responsiveness—on firm performance and its indirect effect via marketing program adaptation. Moreover, it explores changes in these direct and indirect relationships under varying market complexity levels. EM firms are often disadvantaged owing to AE market complexity, such as the presence of low-cost advantage of local AE firms. Hence, investigating this framework in this context is valuable. Using data on Pakistani firms exporting to AE markets, the study finds that marketing agility influences firm performance, and the influence is stronger under high market complexity. When market complexity is low, the influence is mediated by the firms’ ability to adapt their marketing program to meet AE market requirements. Supporting theoretical and managerial implications are offered.     

Does empathy matter in corporate social responsibility? Evidence from emerging markets

This paper explores how cross-country differences in empathy can explain variations in corporate social responsibility (CSR). We show that empathy is positively associated with overall CSR, as well as with its social and environmental components. Our results are robust to using the two components of empathy, empathic concern and perspective taking. Our findings are further corroborated by evidence from a quasi-natural experiment based on the 2004 Indian Ocean earthquake. We find that during the year of the disaster and the following year, firms located in countries with high levels of empathy donated more money than firms located in countries with less empathy.     

Is certification an effective legitimacy strategy for foreign firms in emerging markets?

This study explores the effect of certification on profitability in a transition economy. Obtaining a certification is a strategic legitimacy action that positively affects a firm’s profitability, specifically for a foreign firm in a transition economy, where institutions are less developed and stable. However, we argue that certification is particularly effective if legitimacy based on adaptation to local circumstances is weak. An analysis of data from 319 MNE subsidiaries in China over the period 1998–2009 largely supports our hypotheses. Certification is an effective strategic action which improves profitability. However, the strength of this effect is influenced by the level of marketization of the host region, the institutional quality in the home country, the density of the foreign firm community in the host country, the number of years the foreign firm has been in the host country, and the size of the foreign firm. These findings throw light on the role certification can play in helping firms overcome the liability of foreignness in a transition economy.     

Does corporate diversification create value in emerging markets? New evidence from Chile

Using a sample of 85 Chilean firms listed in the Santiago Stock Exchange from 2005 to 2013, we analyze the impact of corporate diversification on firm value. We consider voting rights of the main shareholder and institutional investors’ influence on firm value. We report firm‐value destruction for diversified firms. Regarding ownership concentration, we report a negative relation between the largest shareholder ownership and firm value. Separation between voting rights and cash flows rights of this shareholder is negatively related to firm value. While Pension Fund Administrators (AFP) mitigate firm value destruction in diversified firms, other institutional investors do not play an active role in controlling value destruction. Finally, if the largest owner is a family, we report firm‐value creation in diversified firms. Copyright © 2016 ASAC. Published by John Wiley & Sons, Ltd.     

Do as the large enterprises do?: Expatriate selection and overseas performance in emerging markets: The case of Taiwan SMEs

This study investigated the less explored expatriation practices of small- and medium-sized enterprises (SMEs) in emerging markets. Data for 133 Taiwan SMEs operating in Malaysia and Vietnam revealed that four personality traits of expatriates, i.e., control ability, independence, openness and social ability exert significant influences on overseas performance given that different types of performance require different of expatriate competency. Analytical results also indicated that the widely perceived influence of the favorable evaluation of the expatriate by top managers does not impact the overseas performance of expatriates. Further, the expatriate practices of Taiwan SMEs vary depending on cultural differences between the home country and host countries. Taken together, the findings of this study have valuable implications for both academicians and practitioners in international management.     

Foreign direct investment in emerging markets and acquirers’ value gains

We investigate the shareholder wealth effects of 306 foreign direct investment (FDI) announcements by UK firms in seventy-five emerging markets (EM). Our results show that acquirers enjoy highly significant gains during the announcement period of FDI. Perhaps surprisingly, the highest gains are accrued to acquirers investing in countries with high political risk and high corruption ratings. The type of asset acquired has also a significant effect on the gains of acquirers’ shareholders, with the highest gains accrued to acquirers of physical assets. Also, investments in physical assets in EM with a high corruption rating elicit the highest gains. We contend that UK firms following resource-seeking strategies in EM with a high corruption rating are facilitated access to resources on favorable terms and this is viewed positively by the market participants. Our results are robust to alternative model specifications and the endogenous choice to expand internationally.     

Does socially responsible investment equity indexes in emerging markets pay off? Evidence from Brazil

This paper explores the financial performance of a mainstream socially responsible investment equity index in emerging markets: the Brazilian Corporate Sustainability Index. The results indicate that investors in emerging markets could accommodate their ethical values while at the same time not scarifying their overall portfolio performance in bullish market periods. However, the financial crisis led ethical investors to take a riskier and less profitable portfolio. These results seem to be due to socially responsible investment in Brazil that, as with other emerging markets, is highly influenced by social and institutional factors.     

How do Asia's two most important consumer markets differ? Japanese–Chinese differences in customer satisfaction and its formation

Little is known about international differences in the formation of customer satisfaction, particularly regarding developed and emerging markets in Asia. This lack of knowledge limits the competitiveness of Western companies in Asia. From the perspectives of economic and cultural country differences, this study thus compares customer satisfaction and its formation between Japan, China, and Germany (Western reference country). Customer satisfaction is higher in Japan than China for goods and private services but lower for public services. It is influenced more strongly by perceived quality and less strongly by perceived value (difference moderated by switching costs), public brand image, and quality expectations in Japan than China. Economic differences between developed (Japan, Germany) and emerging (China) markets influence consumer preference structures more strongly than cultural differences. Due to larger inter-Asian cultural variance than Western managers might expect, Chinese consumer preference structures differ more from Japanese than German consumer preference structures.     

Why do firms delete brands? Insights from a qualitative study

Large consumer goods firms manage and market an assortment of brands and consistently deal with strategic challenges related to brand portfolio management, such as creating or acquiring brands, growing brand equity, managing brands in the portfolio and deleting brands. There is substantial research on several areas of brand portfolio management except in the area of brand deletion. This situation exists despite the fact that deleting weak brands has important implications for a firm and its brand portfolio. Therefore, it is critical to understand why firms delete brands from their portfolios. This research applies a qualitative approach using semi-structured interviews and thematic analysis in the context of firms that adopt a ‘house of brands’ brand architecture and presents findings guided by the strategic decision-making literature.     

Do emerging markets become more efficient as they develop? Long memory persistence in equity indices

It seems reasonable to expect financial market efficiency to be related to the economic development level. We study a 16 year sample, covering 22 countries. The Hurst–Mandelbrot–Wallis rescaled range is our efficiency measure, which we apply to returns and volatility. We find strong evidence of long memory persistence in volatility over time, which is unsurprising. However, unlike previous researchers, we could not find evidence of rescaled ranges trending down over time. However, we introduce an alternative measure of economic development, namely, whether FTSE (2011) classify an emerging market as ‘advanced’ or ‘secondary’. This measure shows greater efficiency in returns and volatility for ‘advanced’ emerging markets.     

How do emerging debt market participants recognize firm internationalization?Evidence from effects on credit ratings

We explore the firm internationalization's impact on firm credit ratings in emerging economies. Adopting Chinese data from 2009 to 2018, we document that firm internationalization varies negatively with its credit ratings, indicating that emerging debt market participants are risk averse and prioritize the risks involved in firm internationalization endeavors. This association is amplified for firms operating in host countries with lower institutional quality, decreased cultural distance from home countries, and when firms do not hold tax haven subsidiaries. We observe that the main association is consistent when alternative dataset (India, Russia, and Brazil) or proxy (cost of debt) is applied.     

All about fun(ds) in emerging markets? The case of equity mutual funds

Using an expanded sample of emerging market (EM) mutual fund returns, we find that funds predominantly investing in EM equities have, on average, higher reward-to-risk ratios compared to benchmark indices. However, adjusted for risk factors EM funds outperform before costs but not after costs. Only growth and Chinese funds generate returns that more than recoup their costs. Local funds have an edge over their foreign counterparts, outperforming them by approximately 1.8% annually. Foreign funds tend to invest more cautiously in small-cap and growth-stocks. We also show that most funds in EMs pursuing a market-timing strategy have rather poor market-timing skills negatively affecting risk-adjusted performance measures.     

The success of stock selection strategies in emerging markets: Is it risk or behavioral bias?

We examine competing explanations, based on risk and behavioral models, for the profitability of stock selection strategies in emerging markets. We document that both emerging market risk and global risk factors cannot account for the significant excess returns of selection strategies based on value, momentum and earnings revisions indicators. The findings for value and momentum strategies are consistent with the evidence from developed markets supporting behavioral explanations. In addition, for value stocks, the most important behavioral bias appears to be related to underestimation of long-term growth prospects, as indicated by above average earnings revisions for longer post-formation horizons and by quite rapidly improving earnings growth expectations. Furthermore, we find that overreaction effects play a limited role for the earnings revisions strategy, as there is no clear return reversal until five years after portfolio formation, setting this strategy apart from momentum strategies.