Do institutional shareholders police management?

Some have argued that legislation limits the ability of institutional shareholders to discipline shirking management teams. However the level of takeover activity in the 1980s suggests that the cost of using takeovers to discipline management has decreased. This may give institutional shareholders the ability to participate actively in corporate governance. This paper presents an empirical examination that is consistent with this hypothesis. First, institutional ownership concentration varies across firms according to the benefits of policing firms in 1988. The relationship is less pronounced in 1980. Second, firms characterized by concentrated institutional ownership are more likely to use takeovers as the disciplinary mechanism. © 1997 John Wiley & Sons, Ltd.     

Accruals quality,information risk,and institutional investors’ trading behavior: Evidence from the Korean stock market

This study analyzes the effect of firm-specific information risk, measured by accruals quality, on the cost of capital using institutional investors’ trading behavior. Institutional investors in firms with lower accruals quality increase their net selling in later years. Furthermore, these investors’ net selling is relevant to the innate and discretionary factors of accruals quality. This relationship is stronger for foreign institutions than for domestic institutions, and it is mostly observed under favorable macroeconomic conditions. We do not observe this relationship for large business groups connected by shares.     

How do the ownership structure and board of directors' features impact earnings management? The Spanish case

This paper examines how the ownership structure and board of directors' features determine the managerial opportunistic behavior exemplified in the management of accounting earnings. This study contributes to the literature by investigating the relationship of firm‐level and country‐level corporate governance systems on the earnings management in the Spanish corporate sector. Results reveal that the varying efficiency of the corporate governance systems is reflected in the way in which accounting discretion is performed. We found evidence that earnings management is reduced as the voting rights of the controlling shareholder increased and that there is an inverse U‐shaped relationship between insiders' ownership and the earnings manipulation. Regarding the board characteristics, we observe that larger, independent boards, those with a larger proportion of female members, and those with an audit committee compounded by a greater proportion of outside independent directors oversee managers more efficiently, constraining their capacity to manage earnings. To the contrary, board duality increases the likelihood of opportunistic manipulation of financial reporting. We found that when the institutional environment improves in the Spanish context, the discretionary power of the corporate sector to overstate the financial statements is reduced. The findings prove the necessity of reinforcing the rules and regulations toward a more transparent disclosure of the financial statements.     

Do institutional investors drive corporate transparency regarding business contribution to the sustainable development goals?

Institutional investors show increasing interest in how companies align their corporate social responsibility strategies with the sustainable development goals (SDGs) proposed by the United Nations (UN). The information disclosed in this regard is essential to know and monitor business contribution to the 2030 Agenda. In this paper, we analyze the influence that institutional investors have on the adoption of the disclosure strategy established by UN and the Global Reporting Initiative (GRI)—GRI‐SDG Compass. The results obtained for a sample of 989 international companies, which prepare their sustainability reports following the GRI guidelines, show that ownership by foreign investors, pension funds, and “other” investors boosts the relevance of the information disclosed in relation to the 2030 Agenda. On the contrary, government, financial institutions, and cross holdings have no impact on the information systems developed.     

Which institutional investors matter for firm survival and performance?

Using data that spans three decades, we assess the diverse roles of institutional investors in impacting survival and performance of chronically underperforming firms and contrast the results for consistently overperforming firms. We find material differences in investor roles and investment returns between these samples. Differentiating among institutional types, controlling for prior performance and attrition bias provides insights unattainable by examining aggregated holdings. For underperformers, results are negative for activist pension funds and long-term institutions, positive for activist hedge funds and short-term institutions, and mixed for institutional blockholders.     

Tail risk and investors’ concerns: Evidence from Brazil

I estimate tail risk for Brazil from January 2001 to July 2020 and investigate the origins of tail risk variation. The tail risk measure peaks at stock market crashes, financial crises, political shocks and disaster events such as the coronavirus pandemic. Moreover, I find that tail risk is countercyclical, has strong predictive power for market returns and negatively predicts real economic activity. In order to identify the investors’ concerns associated with tail risk, I extract daily news from the largest financial newspaper in Brazil. The co-movement between news and tail risk indicates that tail risk variation is mainly driven by disaster concerns, followed by economic and government uncertainty. While economic uncertainty explains the countercyclical property of tail risk, investors only require compensation for bearing tail risk implied by disaster concerns. Similarly, tail risk negatively impacts real outcomes because of the disaster concerns that it identifies. These findings support recent models explaining asset pricing puzzles with time-varying disaster risk.     

Exploring the effects of institutional pressures on the implementation of environmental management accounting: Do top management support and perceived benefit work?

Environmental management accounting (EMA) has been regarded as an effective way to deal with environmental issues and economic performance. On the basis of institutional theory, this research aims to examine the effects of institutional pressures on the implementation of EMA and how such effects are affected by top management support and perceived benefit. Data were collected from the manufacturing firms in the Yangtze River Delta using questionnaire survey method. The results indicated that coercive pressure and normative pressure positively and significantly affect the implementation of EMA whereas mimetic pressure has no significant effect. Furthermore, top management support and perceived benefit play different moderating roles in the relationships between institutional pressures and the implementation of EMA. Top management support and perceived benefit positively moderate the relationships between coercive pressure, normative pressure, and the implementation of EMA although negatively moderate the relationship between mimetic pressure and the implementation of EMA. On the basis of the findings, policy implications and suggestions for future research are discussed.     

Does intellectual capital mediate the relationship between HRM and organizational performance? Perspective of a healthcare industry in Taiwan

Previous studies indicate that the linkage between human resource management (HRM) practices and organizational performance is tenuous. Some key intermediate elements evidently have not been accounted for. In an era where intangibles have become the source of wealth and progress, intellectual capital could be one of the missing links. Therefore, this study predicts that the three components of intellectual capital, namely, human capital, relational capital, and organizational capital, mediate the relationship between HRM practices and organizational performance. Data from 277 hospitals, with a response rate of 56%, confirm the mediation role of intellectual capital in explaining the effect of HRM practices on organizational performance.     

Do investors still benefit from international diversification with investment constraints?

This paper empirically investigates the potential benefits of international diversification for the U.S. investor with various investment constraints from both long-term and time-rolling perspectives. While the addition of portfolio bounds makes asset allocation more feasible, our findings suggest that adding short-selling and over-weighting constraints reduce but do not completely eliminate the diversification benefits of international investment. The over-time analyses show that diversifying portfolios internationally is still beneficial even though financial markets are becoming more integrated. The out-of-sample test suggests that the Markowitz model does not necessarily realize improved mean–variance efficiency but demonstrates risk reduction. The significant time variation in optimal asset allocation implies the necessity for the fund manager to rebalance international portfolio dynamically.     

Does organisational capital influence environmental strategies? Evidence from environmental innovation

As a result of increasing consumer awareness and stakeholder demands about environmental management, firms face stricter challenges surrounding the impact of business operations on the environment. In this regards, environmental innovation is one of the important ways of acting in harmony with the environment. Thus, the purpose of this study is to examine the impact of organisational capital on environmental innovation measured as the process innovation and product innovation. Using environmental innovation data from ASSET4 for the US listed firms between 2002 and 2018, our empirical results reveal a significant positive association between organisational capital and both the process innovation and product innovation. Furthermore, the relationship is stronger in high-profitability and sensitive industries subsamples. These results are robust to additional control variables and endogeneity tests. This study, while endorsing the resource-based view (RBV), provides important implications for the top management teams that organisational capital could be an important channel through which managers can boost environmental innovation.     

Crossing the borders: the relationship between boundary management,work–family enrichment and job satisfaction

Building upon Boundary Theory, the present study aims at investigating boundary management as a predictor of work-to-family enrichment and, in turn, of job satisfaction. We conceptualize boundary management both as an individual (preferences of an employee) as well as a contextual variable (perceived supplies of a workplace), both with respect to the two dimensions permeability (psychological boundary) and flexibility (physical boundary). In a survey of 222 employees with at least one child at home, we assessed employees' permeability and flexibility preferences, perceived permeability and flexibility supplies of the workplace, work-to-family enrichment and job satisfaction. Regression analysis showed a strong positive association between employees' permeability preferences, work-to-family enrichment and job satisfaction and between perceived flexibility supplies of the workplace, work-to-family enrichment and job satisfaction. Work-to-family enrichment mediated the relationship between permeability preferences and job satisfaction. Furthermore, work-to-family enrichment mediated the relationship between perceived flexibility supplies and job satisfaction. Theoretical and practical implications of the results will be discussed.     

Rating and capital structure: How do the signs affect the speed of adjustment?

Standard and Poor's ratings can be modified by the addition of a plus (+) or minus (?) sign to show the relative standing within each major rating category. In this paper, we analyze the influence of these signs on the speed of leverage adjustment for listed European companies in the 2004–2014 period. Our results indicate that (a) when a qualification is accompanied by a minus sign, it adjusts more slowly than qualifications either with a plus sign or without a sign; (b) when a rating has a plus sign, the adjustment is slower than when it has no sign; and (c) when a qualification is BBB‐, the speed of its leverage adjustment is close to zero. These results suggest that companies with signs in their ratings decrease their speed of adjustment to the target leverage ratio. In addition, such companies are especially concerned about a credit rating downgrade when it implies a possible loss of the degree of investment (BBB‐).     

What is the relationship between philanthropy,materiality and public space?

This article explores the dynamic between public space and material representations of philanthropy. It adapts the conception of public space in terms of layers: physical, code and content (Lessig, 2001; Németh, 2012). The article discusses physical forms of philanthropy and the codified norms, processes and relationships in material representations of philanthropy (code). To this end, part one examines how gifts of buildings and the memorialisation of philanthropy embody the philanthropic dominance of public space. Part two explores how the (re)appropriation of public space(s) encapsulates what happens in, and in relation to physical manifestations of philanthropy (content). Specifically; (i) the uses of spaces (ii) deliberation in public spaces; (iii) the decolonisation of philanthropic processes and practices; and (iv) the complementarity of public space and the public sphere. The article offers a novel heuristic for philanthropy and public space that can also inform conversations between development professionals and donors, and public debate.     

Lessening the difference is more – the relationship between diversity management and the perceived organizational climate for gay men and lesbians

With a growing number of European companies following a variety of diversity management strategies, the number of companies including the ‘sexual orientation’ dimension in their diversity programs is increasing. Partially explained by the lack of research on that topic, most companies apply the risk-minimizing strategy of copying actions implemented by companies which have already done more in that field. In this context, this paper aims to provide more profound evidence for evaluating the interrelation between sexual orientation diversity management and the perceived organizational climate for gay and lesbian employees. Study 1 compares Deutsche Bank, Commerzbank and a German equivalent, showing that companies including ‘sexual orientation’ in their diversity programs can be associated with a more supportive organizational climate for gay men and lesbians. Applying a Heideggerian theoretical framework, Study 2 compares regression models based on a sample of 1308 gay men and lesbians working in Germany. It is shown that those organizational practices that lessen the difference between homosexuality and heterosexuality within the organization are more strongly related to positive psychological climates than those practices that accentuate the difference. Equalization of heterosexual and homosexual partnerships, internal thematization of homosexuality and gay marketing are associated with positive climate perceptions; LGBT networks and mentoring are not.     

Time-frequency co-movements between bank credit supply and economic growth in an emerging market: Does the bank ownership structure matter?

This study aims to shed some light on the causal link between bank credit supply and economic growth in Turkey for the banks with the different ownership structures between 1993Q4 and 2017Q3. Wavelet coherence test is used to obtain this objective and to answer the following questions: (i) does bank credit supply lead to economic growth in Turkey and vice versa, and (ii) does the bank ownership matters in this linkage? The findings from wavelet coherence reveal that between 1993 and 2003 in the short and medium term, economic growth leads credit supply but in the long run there is feedback causality between credit supply and economic growth for only public and private banks. However, in the long-run between 1993 and 2003 economic growth leads credit supply in the foreign banks in Turkey. Between 2004 and 2017, there is feedback causality between credit supply and economic growth. Moreover, our findings suggest that bank ownership affects the strength of the linkage between credit supply and economic growth in Turkey especially in the short and medium terms. More specially, within the three types of bank ownership, the findings imply that the strongest correlation among the variables is for the private banks while the weakest one is for foreign banks.     

Do the carry trades respond to geopolitical risks? Evidence from BRICS countries

This paper aims to analyze the implications of geopolitical risks on the return and volatility of carry trade transactions in the context of BRICS countries for the period 2006–2020. Fixed effects regressions considering the sample countries as a single portfolio document that geopolitical risks are correlated with volatility, while the results are inconclusive for returns. The non-parametric time-varying coefficients panel data estimations further indicate that the effect of geopolitical risks on carry trade volatility is amplified during the Global Financial Crisis and the post-2016 episode. Moving to the disaggregated data, the time-varying robust Granger causality test of Rossi and Wang (2019) show that geopolitical risks have a significant in-sample predictive power for both carry trade return and volatility during a myriad of sub-periods, which can not be captured by standard constant parameter techniques in the presence of instabilities. Overall, our empirical results suggest that the exposure to geopolitical risks should be taken into account by global investors for risk diversification purposes when entering carry trade positions in BRICS countries.     

Do Liberalising Reforms Harm the Environment? Evidence from the Post‐Communist Transition

Whether or not economic freedom and capitalism are associated with better or worse environmental performance gives rise to a heated political debate. This article sheds empirical light on the debate by examining the association between economic and political freedom on the one hand and environmental performance on the other. Estimating the effects of economic freedom and democracy on four environmental measures since 1993 across 27 formerly communist countries shows that liberalising the size of the public sector is associated with less environmental damage, although only in autocracies. The consequences of regulatory activity, market openness and the rule of law are more mixed.     

Foreign capital inflows and poverty linkages in South Asia: Do the forms of capital inflows matter?

The relationship between foreign direct investment and poverty reduction has received modest attention in the empirical literature. However, little is known about the relative significant impact of different forms of capital inflows on poverty reduction. This study attempts to investigate the impact of different forms of capital inflows (foreign direct inflows, portfolio equity and portfolio debt inflows) on poverty reduction in major South Asian economies during the post-reform period. The capital inflows-poverty nexus is explored using panel econometric methods robust to cross-sectional dependence. Our empirical results show that while portfolio equity inflows exert a favorable impact on poverty reduction, foreign direct inflows and debt inflows fail to influence poverty. The panel causality results demonstrate that portfolio equity inflows also support poverty alleviation via stimulating economic growth and trade openness. The findings of our study highlight the importance of considering the differential welfare impacts of different forms of capital inflows while implementing capital account liberalization.     

How does a diversity climate shape the relationship between demographic diversity and organizational social capital in the U.S. federal government?

Although intergroup conflict caused by demographic differences in organizations disrupts social interactions between employees, little empirical research has been conducted to understand how to effectively manage demographic diversity in the public workforces. By combining two theories of diversity and inclusion, this article explores the independent and joint effects of three dimensions of demographic diversity (gender, race, and age) and a diversity climate on organizational social capital in the US federal government. Statistical analysis shows a negative relationship between age diversity and organizational social capital and a contrasting positive relationship between a diversity climate and social capital. More important, the diversity climate as a key moderator conditions the impact of racial diversity and age diversity on social capital. The findings suggest the importance of a supportive diversity climate in improving the quality of social relationships within demographically diverse organizations.     

Stale in the pulpit? Leader tenure and the relationship between market growth strategy and church performance

• Taking a strategic choice perspective, the current study examines leader tenure and the growth implications of pursuing a market penetration versus market development strategy in a church setting. Using cross-sectional time series regression analyses of 1415 church organizations over a period of 6 years, study findings demonstrate the influence of leader tenure on both financial and non-financial church performance, but provide minimal evidence supporting the argument that the selected market strategy matters to organizational performance outcomes in churches.

Copyright © 2010 John Wiley & Sons, Ltd.