Does a Tougher Competition Policy Reduce or Promote Investment?

The question of how interventions from the Competition Authority (CA) affect investment is not a straightforward one: a tougher competition policy might, by reducing the ability to exert market power, either stimulate firms to invest more to counter the restrictions on their actions, or make firms invest less because of the reduced ability to have a return on investment. This tension is illustrated using two models. In one model investment is own-cost-reducing whereas in the other investment is anti-competitive. Anti-competitive investments are defined as investments that increase competitors’ costs. In both models the optimal level of investment is reduced with a tougher competition policy. Furthermore, while in the case of an anti-competitive investment a tougher authority necessarily leads to lower prices, in the case of a cost-reducing investment the opposite may happen when the impact of the investment on cost is sufficiently high. Results for total welfare are ambiguous in the cost-reducing investment model, whereas in the anti-competitive investment model welfare unambiguously increases due to a tougher competition policy.     

Does Cultural Background Affect Volunteering Behavior?

The purpose of this qualitative investigation is to help nonprofit organizations which rely heavily on the support of volunteers increase the effectiveness of their marketing by accounting for differences in cultural background among community members. It was conducted in the multi‐cultural Australian context and included 79 participants from different cultural backgrounds. Findings indicate that as a whole, cultural groups differ significantly with respect to their attitudes, social norm and perceived behavioral control over volunteering. Nonprofit organizations are unlikely to be successful in attracting volunteers from a range of different cultural backgrounds unless they account for heterogeneity among volunteers and customize marketing messages. To the authors' knowledge this is the first study that investigates differences in attitude, social norm and perceived behavioral control regarding an important social marketing issue: changing the volunteering behavior of individuals in a multi‐cultural society.     

CEO Duality and Firm Performance: Does Economic Policy Uncertainty Mediate the Relation?

Exploiting two exogenous shocks, we examine the relation between CEO–Chairman duality and firm performance. We report evidence that CEO duality benefits a firm when economic policy uncertainty is high. This implies that CEO–‐Chairman duality is an advantageous governance mechanism for coping with economic policy uncertainty. We show that the Sarbanes‐Oxley Act reduced firm performance if a firm had separate leadership in 2001. However, this negative effect was mitigated if a firm had combined leadership in 2001. The results suggest that CEO duality is complementary to board independence and that the value of CEO duality is contingent on a firm’s environment.     

Does Globalisation Affect Crime? Theory and Evidence

Globalisation sceptics argue that trade liberalisation has high social costs, including an increase in expropriative behaviour such as civil conflict, coercion of labour and crime. We show that a theoretical relationship between trade and expropriation exists, but the sign differs for developed and developing economies. We verify this empirically using data on crime rates. Specifically, we find that trade liberalisation, as measured by both higher openness and lower import duty rates, tends to increase burglaries and theft in very labour‐abundant countries. For other countries, however, we find that trade liberalisation has either a small negative effect on crime or no effect, depending on the country's capital abundance.     

Does Corporate Social Responsibility Affect Information Asymmetry?

In this study, we examine the empirical association between corporate social responsibility (CSR) and information asymmetry by investigating their simultaneous and endogenous effects. Employing an extensive U.S. sample, we find an inverse association between CSR engagement and the proxies of information asymmetry after controlling for various firm characteristics. The results hold using 2SLS considering the reverse side of information asymmetry influencing CSR activities. The results also hold after mitigating endogeneity based on the dynamic panel system generalized method of moment. Furthermore, the CSR–information asymmetry relation is amplified in high-risk firms due to managers’ efforts to build a good reputation. Last, we find that CSR engagement is inversely associated with reputational risk measure and lower predicted value of reputational risk is positively associated with lower information asymmetry measures. We interpret these results as supporting the stakeholder theory-based, reputation-building explanation that considers CSR engagement as a vehicle to build and maintain firm reputation thereby enhancing the information environment.     

How Does Driver Turnover Affect Motor Carrier Safety Performance and What Can Managers Do About It?

The trucking industry is the lifeblood of supply chains. Truck driver turnover and motor carrier safety are two salient issues affecting this industry. While turnover by itself presents a challenge due to the cost of replacing drivers, it takes on additional urgency because turnover may affect motor carrier safety. However, driver turnover research has focused predominantly on identifying factors affecting turnover, thus resulting in limited understanding of how turnover affects motor carrier performance, particularly with regard to safety. This reduces our ability to provide guidance to managers who have to address driver turnover. In this article, we extend prior research by drawing from several theoretical lenses to develop and test theory of the turnover–safety relationship. Furthermore, we investigate whether carrier managers can mitigate the effect of turnover on safety by embedding knowledge in carriers’ routines using activity control, a formal management control mechanism. We employ a longitudinal data set composed of primary and secondary data sources to test our hypotheses. We find the turnover–safety relationship is best characterized by a monotonic negative attenuated pattern and that high levels of activity control mitigate the negative effect of driver turnover on motor carrier safety in domains more under drivers’ control.     

How Does the Largest Shareholder Affect Dividends?

Focusing on the legal protection of minority shareholders in Japan, which suggests that manager‐owned firms are better governed than corporation‐owned firms, this study presents a new test of two dividend models: the substitute model and the outcome model. In support of the latter, I find that manager‐owned firms pay higher dividends than corporation‐owned firms. The paper also examines the association between ownership by the largest shareholder and dividend payments. I find an inverted U‐shaped relationship for manager‐owned firms and a U‐shaped relationship for corporation‐owned firms between them. These results can be explained by the benefits and drawbacks of concentrated ownership.     

Does Social Performance Really Lead to Financial Performance? Accounting for Endogeneity

The empirical relationship between a firm’s social performance and its financial performance is still not well established in the literature. Despite more than 30 years of research and more than 100 empirical studies on the issue, the results are still mixed. We argue that the heterogeneous results found in previous studies are not due exclusively to problems related with the measurement instruments or the samples used. Instead, we posit that a more fundamental problem related with the endogeneity of social strategic decisions could be driving most of the empirical findings. We show that, using a panel data of 658 firms from 1991 to 2005, how some of the results found in previous research change, and some are even reversed when endogeneity is properly taken into account.     

Policy and Legal Environment for E-Commerce in China

The 16th National Congress of the Chinese Communist Party has made the development strategy of "promoting industrialization by using informatization" and the informatization of national economy; the Third Plenary Session of the 16th Central Committee of the Chinese Communist Party regards "developing modern mode of circulation such as e-commerce, chain business, materials circulation" as an important means to perfect market system and to standardize market order.     

Does Policy Instability Matter for International Equity Markets?

We test whether policy risk is systematically priced in equity returns across 49 countries from 1995 to 2013. We construct two global policy risk factors based on the ratings from international country risk guide. They capture the policy risk from government instability (GOVLMH) and the quality of bureaucracy (BURLMH). Both factors are significantly and positively related to equity returns and the BURLMH factor carries a monthly risk premium of 65 basis points. A country with weaker economic and institutional conditions has more risk exposure to the BURLMH factor whereas a country with high democracy has more risk exposure to the GOVLMH factor. Overall, our study reveals the importance and complexity of policy risk in international equity markets.     

How Does the Market Value Corporate Sustainability Performance?

This study provides empirical evidence on how corporate sustainability performance (CSP), as proxied by membership of the Dow Jones sustainability index, is reflected in the market value of equity. Using a theoretical framework combining institutional perspectives, stakeholder theory, and resource-based perspectives, we develop a set of hypotheses that relate the market value of equity to CSP. For a sample of North American firms, our preliminary results show that CSP has significant explanatory power for stock prices over the traditional summary accounting measures such as earnings and book value of equity. However, further analyses suggest that we should not focus on corporate sustainability itself. Our findings suggest that what investors really do is to penalize large profitable firms with low level of CSP. Firms with incentives to develop a high level of CSP not engaging on such strategy are, thus, penalized by the market.     

How Does Corporate Social Responsibility Affect Corporate Continuous Innovation?

From the perspective of sustainable development, this paper analyzes the impact of corporate social responsibility (CSR) on the corporate continuous innovation based on the theory of innovation economics and the demand for innovationdriven development, and then conducts a series of empirical tests based on a sample of Chinese A-shared listed companies from 2008 to 2016. The results show that better CSR performance is conducive to the continuous innovation, and this positive relationship is more pronounced for firms with voluntary accounting information disclosure, for firms of non-high-technology industries, and when policy uncertainty is high. This paper not only enriches the literature on CSR but also provides theoretical references for the innovation practice of enterprises under the innovation-driven strategy.     

Does Consumer Well‐Being Affect Hedonic Consumption?

This article presents a theoretical model that reveals how consumers’ long‐term subjective well‐being (SWB) influences their spending on hedonic products. Using the longitudinal data from a large national panel survey, the study found that consumers’ SWB influences spending on hedonic products via the mediating effects of their positive interpretation of life circumstances and broadened set of activities resulting from positive emotions. The results are explained using cognitive tuning theory and broaden‐and‐build theory and have implications for hedonic products providers in terms of who their target audience is and how demand for their products is generated.     

The Impact of the Recession on Competition Policy: Amending the Economic Constitution?

The strengths of the European competition regime are outlined before identifying challenges presented by the financial crisis. The argument moves from enforcement to systemic threats to the credibility of the economic models on which modern competition policy is based. It then turns from banking failures to the crisis in the European motor industry. It suggests that competition policy comprises an ‘economic constitution’ for the EU which is under threat, but registers the relative complacency of the competition agencies, and argues for a redefinition of policy. The conclusion suggests that the regulatory relationship between the state and the private sector will reflect scepticism about the market and that political changes in the UK and Europe offer radical choices between a reinforced or a marginalised competition policy which the competition policy ‘community’ needs to confront.     

Competition and Environmental Policy in the EU: Old Foes,New Friends?

European competition authorities consider environmental and competition policy to be complementary, as each has the objective of improving social welfare. Naturally, one would imagine that environmental considerations have already been accounted for in competition policy practice, but thus far, only in the case of voluntary environmental agreements. This paper analyzes the extent to which the two types of policy are complementary by examining the legal framework of competition policy, voluntary environmental agreements and three competition cases with equal relevance to the environment and then examines the basic theoretical economic observation that less competition implies lower pollution levels relative to more competition. This trade-off between the benefits of reduced emissions on the one side and increased competition on the other implies that disregarding environmental considerations in the implementation of competition policy entails a negative externality, which can be eliminated if environmental considerations are internalized in competition policy. The impact of the externality is found to depend on the emission level, the emission damage, and market size. Further, this implies that if competition authorities were to adopt a broad definition of the relevant market in competition cases, then environmental considerations would play a limited role in competition policy, whereas a narrow definition implies that environmental considerations should have a much more important place than competitive considerations in competition policy.     

Performance of foreign subsidiaries: Does psychic distance matter?

Psychic distance paradox emerged from studies that found a positive effect of psychic distance on subsidiary performance. Recently, it was argued that international experience influences the relationship between psychic distance and performance. We propose that the effect of market-specific knowledge, rather than general international experience, should be examined because it negates the effect of psychic distance. We study 208 foreign direct investments made by west-European MNEs in the CEE (Central and Eastern European) region between 1996 and 2002 and find that positive relationship between psychic distance and subsidiary performance is observed only in the absence of market-specific knowledge. Psychic distance has no effect on subsidiary performance when the MNEs have CEE investment experience or have established the subsidiary with a local partner.     

How Does Race and Ethnicity Affect Persistence in Immature Ventures?

Does race/ethnicity affect persistence in an immature venture? Using data from the Panel Study of Entrepreneurial Dynamics II, we examine how race/ethnicity, access to supplier credit, and personal financial investment affect three entrepreneurial outcomes: continued engagement, new firm creation, and disengagement. We find that compared with whites, blacks were less likely to receive supplier credit and invest more of their own capital, whereas Hispanics did not significantly differ from whites. Blacks were more likely to persist and remain engaged in an immature venture if they did not achieve success after two years in operation, whereas Hispanics were more likely to disengage.