Bridging the gap: How sustainable development can help companies create shareholder value and improve financial performance

This study examines the effect of integrating sustainability into corporate strategy on various aspects of shareholder value creation and financial performance in the British capital market. The employed method is based on the content analysis of corporate disclosures and a new technique for assessing the adoption of the corporate sustainability concept (embracing the environmental, social, and financial aspects of a company's policies at the same time). Using extensive data of FTSE 350 firms covering the years 2006–2012, 65 companies were selected as meeting corporate sustainability criteria. For the above period, we find that these firms were characterized by higher financial risk exposure, lower asset growth rates, lower BV/MV ratios, lower EVA ratios, and higher MVA ratios. Such relations were generally present among different size and industry groupings. The results support the thesis that firms that incorporate sustainability issues into their business operations are better able to leverage their resources toward stronger financial performance and shareholder value creation than other companies. The paper contributes to the literature by offering a more holistic approach to corporate sustainable performance measurement and shedding additional light on its relation to financial performance in the context of the recent global financial crisis and its direct aftermath.     

Focusing Service Management Efforts: A Model for Non profit Organizations

ABSTRACT

In recent years, many nonprofit organizations have experienced significant cut-backs in support from traditional sources while demand for their services has continued to increase. Many of these organizations have attempted to bridge this growing chasm by increasing their fund raising efforts. While not without value, these activities alone will not resolve the dilemma faced by many of these organizations. The authors present a 12-step model to assist managers in nonprofit organizations in determining how to reallocate scarce human and financial resources from non-crucial to truly critical service offerings and in so doing, better meet the needs of their critical constituencies.     

Haight,William. Retail Advertising: Management and Technique. Morristown,N. J.: General Learning Press, 1976

Abstract

Corporate sponsorship is growing in importance as an element of the communications mix. The number of companies participating in sponsorship, as well as corporate expenditures for sponsoring events, is on the rise as organizations seek new ways to reach audiences and enhance their image. The importance of corporate sponsorship is now generally acknowledged, but little research has been done to understand its value and effectiveness. An exploratory study was conducted to examine the relationship between sponsorship and corporate image. The results suggest that corporate sponsorship can improve corporate image, but its effects differ among companies. Moreover, sponsorship is only one of the information sources consumers use to form their impressions of an organization. Under certain circumstances, corporate sponsorship can damage, rather than enhance, the image of a company.     

Spotlight on pensions

Pensions represent a significant financial burden for many companies and a critical source of retirement income for employees. Accordingly, it is important that corporate financial statements transparently present information about the financial health and consequences of pension plans. Numerous criticisms have been levied at financial reporting for pensions, leading to a recent project to revise pension accounting. This article discusses implications of changes to pensions accounting for financial statement users and corporate managers. In general, research suggests that likely changes in pension accounting could increase financial statement users' perceptions of companies' pension burden and risk. In turn, these perceptions could affect corporate managers' decisions with respect to pension commitments and investments.     

Thiscompanysucks.com: the use of the Internet in negative consumer‐to‐consumer articulations

The Internet has provided a forum through which consumers who are dissatisfied with various companies can vent their anger towards these corporations. A number of World Wide Web (WWW) sites have cropped up on the Internet, their specific aim being the fomenting of negative communication about companies: these are known as corporate complaint WWW sites. Little research has been conducted on negative on‐line consumer‐to‐consumer articulations and the possible impact that these might have on consumers' perceptions and attitudes. This paper attempts to foster discussion on the use of the Internet in facilitating consumer‐to‐consumer communication, particularly negative communication. First, background information on corporate complaint WWW sites is provided. Then, a survey that was conducted in order to glean information on consumer knowledge of and responses to these kinds of WWW sites is discussed. The results indicate that, among the population used in this study, the awareness of corporate complaint WWW sites was moderate. However, when respondents were aware of them, they were likely to visit them. Social influence plays a role in influencing awareness and prompting visits to corporate complaint WWW sites. In addition, an individual difference factor, attitudes towards complaining, influenced the kinds of activities in which the respondents engaged when they visit corporate complaint WWW sites. Future research directions are proposed.     

Corporate Governance and Institutional Transparency in Emerging Markets

This paper posits that differences in corporate governance structure partly result from differences in institutional arrangements linked to business systems. We developed a new international triad of business systems: the Anglo-American, the Communitarian and the Emerging system, building on the frameworks of Choi et al. (British Academy of Management (Kynoch Birmingham) 1996, Management International Review 39, 257–279, 1999). A common factor determining the success of a corporate governance structure is the extent to which it is transparent to market forces. Such transparency is more than pure financial transparency; as it can also be based on factors such as governmental, banking and other types of institutional transparency mechanism. There may also be a choice for firms to adopt voluntary corporate disclosure in situations where mandatory disclosure is not established. The Asian financial crisis of 1997–1999 and the more recent corporate governance scandals such as Enron, Andersen and Worldcom in the United States and Ahold and Parmalat in Europe show that corporate governance and business ethics issues exist throughout the world. As an illustration we focus on Asia’s emerging¹ markets, as, both in view of the pressure of globalization and taking into account the institutional arrangements peculiar to the emerging business system, these issues are important there. Particularly for those who have to find an accommodation between the corporate governance structures and disclosure standards of the Emerging system and those of the Anglo-American and Communitarian systems.     

Marketing channel evolution: From contactual efficiency to brand value co-creation and appropriation within the platform enterprise

Abstract

In recent years, major technological advances have been a primary force driving channel evolution. In particular, the Internet of things has provided a means for some firms to experience the rise of one of the most innovative and cutting-edge channels—the platform enterprise (i.e., firms such as Amazon, Etsy, and Airbnb). We examine the platform enterprise through a marketing channel evolution lens. In doing so, we point to key factors that enable particular kinds of firms to forge unique marketing channels. As platform enterprises, these channels offer value that transcends contactual efficiency, because they utilize their resources and capabilities not only to connect buyers and sellers efficiently but also to create a community of stakeholders whose collective efforts are focused on two linked priorities—brand value co-creation and brand value appropriation.     

Corporate Governance in Asia: A Survey

Corporate governance has received much attention in recent years, partly due to the Asian financial crisis. We review the literature on corporate governance issues in Asia to develop region‐specific and general lessons. Much attention has been given to poor corporate sector performance, but most studies do not suggest that Asian firms were badly run. The literature does confirm the limited protection of minority rights in Asia, allowing controlling shareholders to expropriate minority shareholders. Agency problems have been exacerbated by low corporate transparency, associated with rent‐seeking and relationship‐based transactions, extensive group structures and diversification, and risky financial structures. The controlling shareholder bears some of agency costs in the form of share price discounts and expenditures on monitoring, bonding and reputation building. The Asian financial crisis further showed that conventional and alternative corporate governance mechanisms can have limited effectiveness in systems with weak institutions and poor property rights. Overall, the understanding of the determinants of firm organizational structures, corporate governance practices and outcomes remains limited, however.     

Characteristics of opportunities search of entrepreneurs versus executives: Sources,interests, general alertness

A recent article by Low and MacMillan (1988) suggests that at the current stage of entrepreneurship research, empirical studies that “are not theory driven and do not test hypotheses are no longer acceptable” (p. 155). This paper is written in the spirit of this directive. It starts with an explicit theory of entrepreneurship developed by Israel Kirzner, and tests three hypotheses derived from the theory.The theoretical thrust of the paper emphasizes the role of information and information-seeking behavior as a central element of entrepreneurial behavior. Entrepreneurship is based on discovering of opportunities and resources to exploit them. Our interpretation of Kirzner's theoretical works leads to the formation of hypotheses regarding the differences that should exist in the way entrepreneurs as opposed to managers seek this information. These concern: (1) differences in the manner in which entrepreneurs and corporate managers expose themselves to information; (2) differences in the sources of information used; and (3) differences in evaluating information cues. In addition, we test the hypotheses that success and experience will erode the above differences between entrepreneurs and corporate managers.Our sample involved 51 founders of companies in New Jersey and 36 executives of a very large financial company. A questionnaire was used to gather the data, and scales were formed using principal component factor analysis with a varimax rotation. Differences were tested using univariate and multivariate statistical methods. Significant differences were found in five of the nine factors examined. Entrepreneurs spent significantly more time searching for information in their off hours and through nonverbal scanning. They employed different sources than executives and paid special attention to risk cues about new opportunities. Executives, on the other hand, tended to focus on the economics of the opportunity. These results are only partially consistent with a previous study comparing entrepreneurs and small companies' managers, suggesting a contextual contingency to the behaviors under study. The most persistent finding was regarding the time and “volume” of search for information, reinforcing the idea developed in the recent network theory of entrepreneurship that entrepreneurs are avid information-gatherers and opportunistic learners, but not necessarily, or not uniquely in a verbal, social-networking manner. Finally, with success and experience, the differences become smaller. It seems that success and experience reduce the need or desire of entrepreneurs to search for new opportunities. No such effect was found with our executive sample.     

公司治理及其对审计影响

近年来，公司治理对于保证财务报告的公正合理、阻止公司舞弊发生的作用得到了广泛的认可和重视。本文阐述了公司治理模式中各因素对审计过程的影响，其中，公司管理层作为公司治理模式确立者对于审计过程具首要影响。     

TMT社会网络、公司创业与企业绩效关系研究

拥有大量内外部信息资源的高管团队(TMT),其社会网络不但可以提供公司创业的机会来源,也是企业现在绩效和未来绩效的影响因素。TMT的社会网络只有通过公司创业机制才能转化为企业绩效的价值创造过程。中国背景下的实证研究显示:TMT社会网络、公司创业都与企业绩效正相关,对于企业而言,要高度重视通过管理手段激励整个高管团队的所有成员去构建有效的内外部社会网络;公司创业的价值增值中介作用也得到证实,公司创业发挥着重要的资源整合作用,有价值的TMT内外部社会网络只有充分融入企业的产品或服务创新,以及深层次的战略更新过程中,为企业的价值增值服务,才能转变为企业绩效。     

The Link Between Small Business Governance and Performance: The Case of the Ghanaian SME Sector

ABSTRACT

The present study set out to examine corporate governance practices of SMEs in Ghana and whether there is any linkage between these governance practices and financial performance. We employed two levels of interaction to achieve our objectives: The first is an interview for a general understanding of governance issues in the SME sector and the subsequent design of a questionnaire for an exploration of the linkages between governance issues and firm financial performance by employing a linear model. The study reveals that governance structures in SMEs are jointly influenced by credit providers and business ethical considerations. The regression results show that board size, size of audit committees, corporate ethics and the proportion of outsiders on the audit committees have negative impact on financial performance while independence of the board and the presence of audit committees enhance firms' financial performance. The findings have some policy implications in that it shows that exporting SMEs are relatively profitable. It is recommended that in an attempt to promote exports, the legal and regulatory environment should be conducive for these firms.     

Corruption in Asia Pacific business organizations: insights on causes,conditions, consequences and treatment

ABSTRACT

In the wake of the 1997 Asian financial crisis a wave of articles and commentaries focused increasingly on the so-called ‘dark side’ of Asian business. At the forefront of these lay investigations into the deleterious effects of corruption on economic development, business performance and international investor confidence. In subsequent years, due in part to converging pressures for universal corporate standards, the flow of research declined on the (implicit) assumption that corruption was a decreasing problem as new generations of Asian managers assimilated ‘Western’ values and practices. However, despite continuing admonishments and initiatives, the effects of corrupt practice at all levels remains as entrenched and as serious as ever. Blending micro and macro-level analysis along with both conceptual and empirical investigations, this collection offers some of the most recent frameworks and findings to explain the causes, conditions, consequences and treatment of corruption in 21^st century Asia.     

Limiting Laissez Faire Profits: The Financial Implications

Traditional corporate finance endorses the principle of stockholder wealth maximization as the purpose of business. In light of recent scandals and legislation, businesses are increasingly expected to use financial resources in a manner which benefits society and not just the owners of the firm. This imputation of a corporate soul will necessarily reduce investor returns, which has at least two major financial implications for the firm and the economy. The first is that it may cause investors to change their required rates of return and thereby change the amount of capital available to firms (in␣particular), and the economy (in general). The second is that it may implicitly replace equity with debt in the capital structure of firms, with all that implies for financing and corporate governance. The purpose of this article is to examine these implications and evaluate their sometimes counterintuitive consequences.     

Chaffee,Steven H., and Petrick,Michael J. Using the Mass Media: Communication Problems in American Society. New York: McGraw-Hill, 1974

Abstract

In recent years, a number of internal and external forces have urged companies to pay increased attention to the role that corporate advertising plays in marketing communications strategy. Despite this increased importance, a comprehensive view of current corporate advertising practices does not exist. This study reports the practices of the 500 largest manufacturing and the 300 largest non-manufacturing firms in the U.S. and makes observations on several key management issues, including the definition of corporate advertising, objectives and measurement, funding, and future directions.     

The Transition to E-Commerce: A Case Study of a Rural-Based Travel Agency

ABSTRACT

When the Internet started to establish itself in the corporate world, some observers foresaw a diminishing role for, if not the end to, many intermediary functions. Consequently it has been argued that suppliers will need to use the Internet and related technologies to cut costs and establish closer links with consumers by bypassing organizations that currently play an intermediary role in the traditional transaction system. The objective of this case study is to enhance the understanding of the process of transition from a traditional business model to an e-commerce model. It focuses on a very small business that has successfully navigated the transition to e-commerce.     

Corporate Social Responsibility as a Vehicle to Reveal the Corporate Identity: A Study Focused on the Websites of Spanish Financial Entities

This study explores the relevance of corporate social responsibility (CSR) as an element of the corporate identity of Spanish financial institutions. Specifically, it aims to analyze the CSR actions developed by financial entities through the analysis of all the available information disclosed in their websites. A content analysis applied to 82 banking institutions, followed by different quantitative analyses, reveals the multidimensionality of CSR. Findings show that, while the number of entities institutionalizing CSR values as core elements of their identities is still reduced, most organizations disclose CSR information to construct communicated identities and legitimate behaviours. Besides, these dimensions are classified depending on the stakeholder the action is aimed to, and that entities favour the generation of distinctive identities through the implementation and communication of more visible CSR actions like those involving their customers or the community. In any case, results indicate that organizations with certain characteristics are more likely to construct distinctive identities through CSR activities and to establish ethical and social values within their corporate statements and cultures.     

Financial Information Credibility,Legal Environment,and SMEs’ Access to Finance

Abstract

There remains academic debate on the association between credible financial information and small firms’ access to diversified sources of finance. This study investigates the role of credible financial information and its interaction with a country’s legal and regulatory environment on the access of small- and medium-sized enterprises (SMEs) to diversified sources of finance in 129 developing countries. The findings indicate positive impacts of financial information quality and a country’s legal and regulatory environment on small firms’ access to diversified sources of finance. SMEs operating in a weak legal and regulatory environment benefit more from providing credible financial information. The findings are robust after controlling for the endogeneity of firms audit decision using a two-stage instrumental variable method. Our evidence suggests that firms’ credible signaling of the quality of their financial information helps reduce the adverse selection problem for finance suppliers, increasing small firms’ access to diversified sources of finance.     

The Corporate Social Responsibility of Pharmaceutical Product Recalls: An Empirical Examination of U.S. and U.K. Markets

The pressure on companies to practice corporate social responsibility (CSR) has gained momentum in recent times as a means of sustaining competitive advantage in business. The pharmaceutical industry has been acutely affected by this trend. While pharmaceutical product recalls have become rampant and increased dramatically in recent years, no comprehensive study has been conducted to study the effects of announcements of recalls on the shareholder returns of pharmaceutical companies. As product recalls could significantly damage a company’s reputation, profitability and brand integrity, this paper investigates the effect on shareholder wealth and the extent to which the adoption of CSR practices by pharmaceutical companies in the United Kingdom (U.K.) and the United States (U.S.), the two largest markets for pharmaceutical products in the world, affected market reactions surrounding product recall announcements. The analysis of product recall announcements from 1998 to 2004 compiled from The Pharmaceutical Journal and U.S. Food and Drug Administration enforcement reports revealed marked differences in the way market participants in the two countries responded to news of product recalls. U.S. investors penalised firms according to the severity of product defects while U.K. investors were indifferent. While U.K. investors rewarded product recalls by firms which were not usually CSR-active, U.S. investors punished non-CSR active firms that performed recalls. These observations could pose strategic challenges to pharmaceutical firms operating in both countries. Jeremy Cheah is an Assistant Professor of Finance at Nottingham University Business School, Malaysia Campus. His research interests lie in the area of applied corporate finance and investment management. Wen Li Chan was an Advocate and Solicitor in Kuala Lumpur, Malaysia before assuming the post of University Teacher in Information Systems and Strategy at Nottingham University Business School, Malaysia Campus. She is currently investigating the roles and implications of information on firm valuation, particularly in the area of corporate cyber-litigation and corporate social responsibility. Corinne Chieng is a Corporate Executive at Star Publications (M) Berhad, Malaysia. She has previously worked as a tax consultant at Arthur Andersen Malaysia. Her research interests include the financial implications of corporate social responsibility on the valuation of firms.     

Comparing Big Givers and Small Givers: Financial Correlates of Corporate Philanthropy

In a departure from the traditional studies of corporate philanthropy that focus on board composition, advertising, and social networks, the authors investigate the financial correlates of corporate philanthropy. The research design controls for firm size and industry while observing firms from a variety of industries. The sample contains matched pairs of generous and less generous corporate givers. The authors find, as hypothesized, a positive relationship between a firm's cash resources available and cash donations, but no significant relationship between corporate philanthropy and firm financial performance, regardless of whether corporate philanthropy is measured as cash payouts or the aggregate contributions that charities actually receive, and regardless of whether financial performance is gauged using accounting measures or market measures. Whereas the link between available resources and corporate philanthropy is well accepted in the literature on corporate social responsibility, it has been rarely tested and never so definitively found as in this research.