Impact of Environmental Performance on Firm Value for Sustainable Investment: Evidence from Large US Firms

This research examines the impact of environmental performance on firm value, applying the event study methodology to Newsweek’s ‘Green Rankings’ announcement of 2012 for large US firms. Specifically, it analyzes the impact of the absolute green score and green rank of firms on their performance in the stock market. We found that investors perceive the announcement as positive news, leading to significant positive standardized cumulative abnormal returns (SCARs). After controlling for industry‐ and firm‐specific effects, we observed that firms with repeated green rankings for enhancing environmental performance showed significantly higher SCARs than those with either reduced or unchanged environmental performance. In addition, the environmental impact score measuring environmental damage from a firm's operational activities was found to be the most influential factor in improving the firm's value. Our findings are beneficial to managers in allocating resources to different types of environmental initiative, and provide valuable insight for sustainable environmental investment. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

The impact of sustainability (environmental,social, and governance) disclosure and board diversity on firm value: The moderating role of industry sensitivity

Using a large panel data set comprising 812 listed European firms, this study investigates whether sustainability disclosure (environmental, social, and governance) and female representation on boards affect firm value. We observe a positive impact of sustainability disclosure and board gender diversity on firm value, suggesting that the best management practices, enhanced stakeholder trust, and female representation on boards improve firm value. We observe that the firms in sensitive industries achieve superior social and governance performance. We also observe that the firms with higher female representation on their boards present significantly superior environmental, social, and governance performance. Our results are robust to different firm and country specific control variables and to year‐ and country‐fixed effects.     

Incentive Pay and Firm Performance: Moderating Roles of Procedural Justice Climate and Environmental Turbulence

In connection with the literature on strategic reward and agency theory, this study investigates the effects of incentive pay on employee outcomes and firm performance. We identify employee outcomes, such as commitment and competence, as mediating processes that explain the effects of incentive pay on firm performance. We further propose procedural justice climate and environmental turbulence as boundary conditions that determine the strength of the effects of incentive pay on employee outcomes. The research model is tested using multisource data collected at three time points over a five‐year period from 227 Korean companies. Our analysis confirmed that incentive pay enhanced employee commitment and competence, which, in turn, improved the operational and financial performances of firms. The effect of incentive pay on employee commitment was negative for firms with a low procedural justice climate, but positive for firms operated under a highly turbulent environment. By contrast, the effect of incentive pay on employee competence was positive only for firms operated under a stable environment. This study enriches the literature by presenting and validating plausible underlying mechanisms and boundary conditions under which strategic performance–contingent incentive pay affects firm performance. © 2015 Wiley Periodicals, Inc.     

Exploration and exploitation and firm performance variability<Emphasis>:</Emphasis> a study of ambidexterity in entrepreneurial firms

A challenge young entrepreneurial firms usually face is reducing variability in firm performance in order to mitigate survival difficulties. This paper suggests ventures should have a clear preference for either exploration or exploitation, because such an approach to ambidexterity reduces variability in firm performance. We specifically concentrate on the moderation effects of firm size and environmental dynamism in a sample of young entrepreneurial firms. We found evidence for the effects of lower performance variability in dynamic environments. This is an important insight, because environmental dynamism is a contingency where performance variance is considered problematic for entrepreneurial firms. Our research has implications for the establishment phase of entrepreneurial firms as it suggests they should carefully consider how much they explore to be as different as possible and how much they exploit to be as effective as possible. This is particularly important when they are younger and exposed to dynamic environments.     

Resource Configuration in Family Firms: Linking Resources, Strategic Planning and Technological Opportunities to Performance

abstract    We apply the resource-based view of the firm to the study of family firms by investigating how a family specific resource (reciprocal altruism) and a firm specific resource (innovative capacity) contribute to family firm performance. We then examine how the impact of these resources is moderated by strategic planning and technological opportunities. Our findings suggest that family firms can benefit from emphasizing the positive aspects of kinship and from developing innovative capacities. As such, we demonstrate that not only do firm specific resources contribute to family firm performance, but also that family relationships can be a source of competitive advantage for a family firm. In addition, we found a heightened importance of reciprocal altruism in environments rich in technological opportunities, and that strategic planning is more important for those family firms that lack innovative capacities.     

Talent management,absorptive capacity,and firm performance: Does it work in China and Russia?

This article investigates the relationship between talent management (TM), absorptive capacity (AC), and firm performance. We build a theoretical framework and examine the mediating role of a firm's AC in TM–performance relationships in the contexts of China and Russia. We use a sample of 120 Chinese and Russian firms to provide empirical evidence of our hypotheses. Our results show for both Chinese and Russian firms, a well‐developed TM system positively influences a firm's ability to acquire, assimilate, and exploit knowledge as well as increase the overall level of a firm's AC. We also found support for the argument that TM has an indirect positive effect on firm performance through its AC; moreover, the effect is stronger for Chinese firms, specifically, within the link between AC and performance.     

Can strategic flexibility help firms profit from product innovation?

Although it is generally acknowledged that product innovation is critical for firms to sustain their competitive advantages, innovating firms sometimes fail to obtain economic returns from product innovation. This study focuses on the moderating effect of strategic flexibility (composed of resource flexibility and coordination flexibility) on the relationship between product innovation and firm performance, in order to address an important but previously unexplored question: Can strategic flexibility help firms profit from product innovation? Our empirical test, utilizing a sample of 607 Chinese firms, reveals that the moderating effect of resource flexibility on the positive relationship between product innovation and firm performance is negative, while that of coordination flexibility is positive. Further, such moderating effects are especially likely to be profound for firms confronting a high level of competitive intensity. We conclude by discussing our contributions, the implications, and possible future extensions.     

The Effect of Founding Family Influence on Firm Value and Corporate Governance

We examined a sample of 120 Norwegian, founding family controlled and non‐founding family controlled firms, to address two important research questions: (1) is founding family control associated with higher firm value; and (2) are there unique corporate governance conditions under which a founding family controlled firm can be more valuable? We find a positive association between founding family control and firm value for four alternative definitions of founding family control. We find that the association between founding family CEOs and firm value is stronger among younger firms, firms with smaller boards, and firms with a single class of shares. However, the impact of founding family directors on firm value is not affected by corporate governance conditions such as firm age, board independence, and number of share classes. We also find that the relation between founding family ownership and firm value is greater among older firms, firms with larger boards, and particularly when these firms have multiple classes of shares. Our results imply that founding family controlled firms are more valuable and governed differently than firms without such influence. Furthermore, our results also suggest that founding family CEOs can enhance firm performance when family influence does not create shareholder entrenchment or when their cash flow rights are more aligned with their control rights.     

Employee ownership and firm performance: a meta‐analysis

Employee ownership has been an area of significant practitioner and academic interest for the past four decades. Yet, empirical results on the relationship between employee ownership and firm performance remain mixed. To aggregate findings and provide potential direction for future theoretical development, we conducted a meta‐analysis of 102 samples representing 56,984 firms. Employee ownership has a small, but positive and statistically significant relation to firm performance ( = 0.04). The effect is generally positive for studies with different sampling designs (samples assessing change in performance pre‐employee–post‐employee ownership adoption or samples on firms with employee ownership), different performance operationalisation (efficiency or growth) and firm type (publicly held or privately held). Suggesting benefits of employee ownership in a variety of contexts, we found no differences in effects on performance in publicly held versus privately held firms, stock or stock option‐based ownership plans or differences in effects across different firm sizes (i.e. number of employees). We do find that the effect of employee ownership on performance has increased in studies over time and that studies with samples from outside the USA report stronger effects than those within. We also find little to no evidence of publication bias.     

The contingent value of firm innovativeness for business performance under environmental turbulence

Drawing on the resource-based view and contingency theory, this study investigates how technological and market turbulence influence the effect of firm innovativeness on business performance. Using a survey-based sample of 452 Taiwanese manufacturing firms in a broad range of industries, we employ a hierarchical moderated regression analysis to test two-way interaction hypotheses. The results show that technological turbulence enhances the positive effect of firm innovativeness on business performance but that market turbulence does not. The post hoc analysis indicates that when technological turbulence is high, firm innovativeness has a more positive effect on business performance. An additional sub-group analysis reveals that the positive moderating influence of market turbulence manifests only in the high-technology sub-sample. Our findings suggest that managers of manufacturing firms should nurture high levels of innovativeness to help their firms to thrive under high technological turbulence. This study contributes to the firm innovativeness literature by clarifying the boundary conditions under which firm innovativeness enhances business performance. Contrasting with previous research, our research demonstrates that the performance effect of firm innovativeness is not equally positive but instead increases with the level of technological turbulence. We shed new light on the crucial role of firm innovativeness in an environmental of high technological turbulence.     

The Effects of Foreign Direct Investment Colocation: Differences Between Manufacturing and Service Firms

Colocation may result in positive performance effects because of agglomeration benefits or in negative outcomes because of fiercer competition. Using the notions of industrial organization economics, this study offers a comprehensive industry‐specific analysis on the performance effects of international colocation. We predict that bigger firms will benefit more from colocation of foreign firms in a host country. Considering industry and home country peers, the analysis suggests that positive effects dominate for manufacturing firms whereas service firms are negatively affected. However, these effects are mitigated by a firm's size in a location. A large‐scale empirical analysis on firm‐level data supports the hypotheses. Copyright © 2015 John Wiley & Sons, Ltd.     

Sustaining Competitive Advantage Through Corporate Environmental Performance

This research investigates the relationship between a firm's environmental efforts and the sustainability of its competitive advantage by analyzing the effects of change in firm environmental performance on the persistence of profitability growth. We find that environmental resources allow a firm with superior financial performance to sustain its competitive advantage, and also complement the efforts of a poorly performing firm to hasten recovery from inferior financial performance. Our findings further indicate that firms attain such positive effects through enhanced profit margins resulting from improved environmental performance. Additionally, we observe that a corporate strategy of improving environmental performance demonstrates management's responsibility to maximize the shareholder wealth of a well‐performing firm. The results provide valuable insights to align environmental activities towards developing unique resources for sustaining the competitive advantage. The study provides an empirical support for creating economic value by benefiting the environment. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

共享审计可以提高并购绩效吗？——来自中国A股上市公司的经验证据

以2004—2016年我国A股上市公司的并购事件为样本,研究并购双方共享审计师对并购绩效的影响,并考察了信息不对称程度对两者之间关系的调节作用。结果表明并购双方共享审计师能显著提高并购方及目标方的并购绩效;对于信息不对称程度更大的跨行业、跨地域并购事件,共享审计对并购绩效的正向影响更为显著。进一步检验发现共享审计可以显著降低并购双方之间的信息不对称程度,进而导致较低的并购溢价。     

Real effects of social trust on firm performance during COVID-19

This study uses a difference-in-differences estimation method to address potential endogeneity between corporate social responsibility (CSR) and firm performance using a natural experiment of COVID-19, with a cross-country sample of 80,454 firm-quarter observations across 51 countries. We find that high-CSR firms show better performance, raise more debt, and invest more during COVID-19. The positive effect of CSR on firm performance is more pronounced in countries with better governance and among non- International Financial Reporting Standards adopters. Our findings suggest that when trust in firms and markets falls during an economic crisis, the trust established between a firm and its stakeholders via socially responsible behavior pays off.     

Employee ownership heterogeneity and firm performance in China

Employee ownership (EO) has gained increasingly significant attention from both business practitioners and policy makers in China. Through the examination of the implementation of EO by China's listed firms from 1992 to 2017 with a total of 3,396 firms and 36,559 firm‐year observations, we explored the relationship between EO implementation and firm performance. In general, we found that over time, EO firms outperform non‐EO firms in China, and the influence of EO is only different in nuanced aspects in different time periods according to the change of policies. The data from the most recent period, that is, 2014–2017, indicate that EO adopters have higher performance than matched non‐EO firms both before and after adoption, but the relative performance does not increase after adoption. We further examined the interactive effect between EO and executive stock ownership (ESO) schemes and found that the adoption of ESO weakens the positive relationship between EO and firm performance. Regarding different types of EO, we found lower performance in companies with high return rights but no control rights, and we found better performance when high return rights are combined with control rights. We suggested policy and managerial implications on the basis of the findings.     

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 Value Relevance of Environmental Audits: Evidence from Japan

Environmental audits are implemented internally in order to monitor compliance with environmental laws, regulations and related accounting rules, and to develop recommendations for ways in which to improve environmental accounting processes and performance. In addition, external third‐party assurance on environmental information is used to verify whether firms’ disclosures on environmental information are in compliance with environmental accounting rules and regulations. We examine whether firms’ environmental audits positively affect their market values and whether third‐party assurance strengthens positive effects, using value relevance theory as a theoretical foundation. Our main tests are based on 266 Japanese manufacturing firms’ published environmental reports for the period 2010–2013. We find that the average market value of firms that implement environmental audits is 9 percent greater than those that do not. Further, we find that environmental audits positively affect firm value, largely through interaction with third‐party assurance. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

The impact of supply-side electronic integration on customer service performance

Although information technologies have been expected to directly enhance firm performance in specific value chain activities (e.g., supplier performance or customer service performance), their advanced capabilities offer the promise of organizational integration and spill-over benefits. Enterprise systems provide firms with platforms for electronically integrating their supplier and demand chain activities. Spill-over benefits refer to the impacts that occur when IT investments in one organizational domain benefit performance in a different value chain side of the firm. Supply-side electronic integration (SEI) refers to the use of electronic means to integrate the exchange of information and transactions with suppliers through enterprise systems. In our research, we examine whether SEI generates spill-over effects on customer service performance, over and beyond firms’ direct investments in customer-side digitization. We also examine whether structural attributes of the firm (e.g., vertical integration, diversification, and centralization) moderate the effects of supply-side electronic integration on customer service performance. Our analysis of a secondary dataset of InformationWeek 500 firms shows that SEI helps firms realize cost-savings in their customer service performance, especially if they are less vertically integrated. In addition, SEI investments help diversified and centralized firms achieve cross-selling with their customers. We also find that SEI is more likely to help decentralized and diversified firms achieve customization in their customer service activities. These results suggest that SEI helps firms achieve twin goals in customer service: cost reduction and revenue expansion. Overall, our research reveals how supply-side electronic integration could generate benefits in customer service performance in firms.     

Do Multiple Directorships Increase Firm Value? Evidence from Independent Directors in Hong Kong

This paper studies the effect of independent directors’ multiple directorships (MDs) on firm value and examines the countervailing effects of quality and “busyness.” Using a unique panel data set covering all Hong Kong‐listed firms, we find that despite independent directors’ busyness, there is a strong and positive relation between the number of MDs of independent directors and firm value. We also find, however, that the positive effect of MDs declines at higher levels of busyness. We find that the effects of MDs on firm value are stronger under better corporate governance standards. We show that independent non‐executive directors (INEDs) with a CEO position underperform because of busyness. After the requirement of increasing the minimum number of INEDs in Hong Kong from 2004, the quality effect of MDs seems to be reduced, implying the policy may have increased the busyness of some INEDs. Our results are robust to a range of estimation procedures, including alternative MD and firm‐performance measurements, and 2SLS. Our empirical evidence suggests that highly engaged independent directors still improve firm value and supports increasing the minimum requirement for the fraction of independent directors, even under a supply constraint of qualified directors.     

The impact of just-in-time manufacturing on firm performance in the US

Just-In-Time manufacturing has been subjected to numerous studies both empirical and methodological. This work attempts to measure the impact of JIT on accounting measures of performance. Most technologies and investments are justified on the basis of their impact on financial and accounting measures which are not easily quantified. Our empirical methodology, simultaneous equation estimation, allows us to isolate the partial effects of JIT on various accounting measures thus gauging the true impact of this method on firm performance. Our results show that after JIT adoption firms reduced the labor content in facilities, increased inventory turnover and enhanced earnings. There was no significant impact on prices charged by the firm. These results support the anecdotal evidence on JIT and the theoretical work done by various authors. Even though the firms studied experienced a downturn in their performance our empirical methodology could identify positive benefits resulting from JIT adoption.