Does corporate social responsibility affect the cost of capital?

We examine the effect of corporate social responsibility (CSR) on the cost of equity capital for a large sample of US firms. Using several approaches to estimate firms’ ex ante cost of equity, we find that firms with better CSR scores exhibit cheaper equity financing. In particular, our findings suggest that investment in improving responsible employee relations, environmental policies, and product strategies contributes substantially to reducing firms’ cost of equity. Our results also show that participation in two “sin” industries, namely, tobacco and nuclear power, increases firms’ cost of equity. These findings support arguments in the literature that firms with socially responsible practices have higher valuation and lower risk.     

Nonstationarity and Stochastic Stability of Relative Income Clubs

The recent literature on “convergence” of cross‐country per capita incomes has been dominated by the two hypotheses of “global convergence” and “club‐convergence,” pertaining to limits of estimated income distribution dynamics. Utilizing a new measure of “stochastic stability,” we establish two stylized facts regarding short‐ and medium‐term distribution dynamics. The first is non‐stationarity of transition dynamics, in the sense of changing transition kernels, and the second is emergence, disappearance, and re‐emergence of a “stochastically stable” middle income group. This middle income group emerges as the gap between rich and poor clubs gets larger, and it changes the dynamics of transition to and from the rich and poor clubs, eventually narrowing the gap between the poor and rich as the middle club vanishes. Analyzing the stochastic stability of middle‐income groups is thus a first step toward understanding higher‐order dynamics of narrowing or widening of the gap between rich and poor countries.     

The impact of the tertiarization process in Spanish economic growth from a regional perspective

The article focuses on the impact that the growth of the service sector has had on the economic growth of the Spanish regions. Thus, the study tries to define regional groupings in order to identify different modalities of regional growth. As a result of the cluster analysis, we propose the groupings and analyse the beta-convergence in per capita GDP and in terms of the degree of tertiarization in the Spanish regions. Taking these groups as our starting point, a data panel model with fixed effects is applied and the study concludes that mainly capital stock and capital productivity in market services explain to a great extent the growth in per capita GDP in the Spanish regions.     

In search of meaning: Lessons,resources and next steps for computational analysis of financial discourse

We critically assess mainstream accounting and finance research applying methods from computational linguistics (CL) to study financial discourse. We also review common themes and innovations in the literature and assess the incremental contributions of studies applying CL methods over manual content analysis. Key conclusions emerging from our analysis are: (a) accounting and finance research is behind the curve in terms of CL methods generally and word sense disambiguation in particular; (b) implementation issues mean the proposed benefits of CL are often less pronounced than proponents suggest; (c) structural issues limit practical relevance; and (d) CL methods and high quality manual analysis represent complementary approaches to analyzing financial discourse. We describe four CL tools that have yet to gain traction in mainstream AF research but which we believe offer promising ways to enhance the study of meaning in financial discourse. The four tools are named entity recognition (NER), summarization, semantics and corpus linguistics.     

Societal marketing: A strategic view of the marketing mix in the 1970's

The marketing environment has experienced dramatic changes in the late 1960's and the 1970's. This article deals with the design of the marketing mix in the 1970's to meet the demand of its changing environment. It encompasses a conprehensive review of the marketing literature pertinent to the subject.     

THE SIGNIFICANCE OF BASE YEAR IN DEVELOPING FAILURE PREDICTION MODELS

Most failure prediction models developed over the past fifteen years have been based on firms' financial characteristics one year before they collapsed. This article reports the results of a study employing multiple discriminant analysis on a sample of fifty-three British companies which failed over the period 1960–1971. Models were developed on various financial ratios and an industry indicator for each of the five years, prior to failure, and the results in fact show that the model developed from data five years before failure performed at least as well as that derived one year prior to bankruptcy.     

Common Shocks and Relative Compensation

This paper studies qualitative properties of an optimal contract in a multi-agent setting in which agents are subject to a common shock. We derive a necessary and sufficient condition for the optimal reward of an agent producing an output level y to be a decreasing (increasing) function of the outputs of the other agents, under the assumption that the agents’ outputs are informative signals of the value of the common shock. The condition is that the likelihood ratio p(y, e, η)/p(y, e′, η), where e is a higher effort level than e′ and η is the value of the common shock, be a decreasing (increasing) function of η. We give examples of applications of the result and examine its consequences for CEO compensation.     

‘We're still the same people’: developing a mass media campaign to raise awareness and challenge the stigma of dementia

• A popular awareness‐ and fund‐raising vehicle for charities and non‐profit organisations is the annual ‘Day’ or ‘Week’ campaign. Such campaigns can be challenging because they often involve multiple, potentially competing objectives, not least the requirement to balance the needs of the general public with the those who already have, or are caring for someone with, a particular condition. This paper reports on formative research conducted in Scotland to inform the development of an awareness‐raising campaign on the issue of dementia, which had two key aims: to raise awareness of the condition among the general public, and to reduce the stigma associated with it. Social marketing consumer research was conducted with three key groups—the general public, carers and people with dementia‐to explore their beliefs and perceptions about dementia and their information needs. The research highlights the importance of providing realistic and credible images of people with dementia to the general public and the importance of avoiding instilling fear of the condition. Guidance for future awareness‐raising activity in this area is provided.

Copyright © 2006 John Wiley & Sons, Ltd.     

From free oil to ‘freedom oil’: terrorism,war and US Geopolitics in the Persian Gulf

Oil has been a major driving force behind foreign interests, regional and domestic balance of power, and territorial conflicts in the Persian Gulf. As a result of the ‘9/11’ terrorist attacks debates on oil and the United States' security agenda have significantly shifted. If on one side, those opposing US military interventionism have argued that the ‘war on terror’ provided one more convenient cover for a renewed ‘imperialist oil grab’ in this region; on the other, links between oil and terrorism pointed at problems of governance in oil-producing countries. As the ‘war on terror’ became justified as a ‘war of liberation’ against oil-funded dictators, the US portrayed its foreign policy as shifting from ensuring free access to oil for the world market, to ensuring that oil is delivering ‘freedom’ to local populations. Although engaging the crucial issue of oil governance, there is yet little evidence given the number of war victims and potential vested interests that a US policy shift from ‘free oil’ to ‘freedom oil’ is genuine and viable.