Climate change mitigation: Carbon assurance and reporting integrity

Concern about climate change has increased the pressure on firms to be accountable for social impact and to report on environmental, social and governance (ESG) performance. Focusing on the view that sustainability-oriented firms are likely to consider wider stakeholder interests and pursue high financial reporting integrity, this paper examines the association between carbon assurance and earnings management. Using a sample of firms listed on the New York Stock Exchange, we find voluntary adoption of carbon assurance (level), carbon disclosure and gender diverse boards are negatively associated with earnings management. Additional tests using different components of carbon assurance (percent and verification) confirm our main results. Our results suggest that firms that voluntarily invest in carbon assurance, carbon disclosure and gender diverse boards are less likely to engage in earnings management and thus have higher reporting integrity. This aligns with the view that firms' ethical concerns translate into higher quality reporting.     

Option augmented density forecasts of market returns with monotone pricing kernel

Basic financial theory indicates that the ratio of the conditional density of the future value of a market index and the corresponding risk neutral density should be monotone, but a sizeable empirical literature finds otherwise. We therefore consider an option augmented density forecast of the market return obtained by transforming a baseline density forecast estimated from past excess returns so as to monotonize its ratio with a risk neutral density estimated from current option prices. To evaluate our procedure, we compare baseline and option augmented monthly density forecasts for the S&P 500 index over the period 1997–2013. We find that monotonizing the pricing kernel leads to a modest improvement in the calibration of density forecasts. Supplementary results supportive of this finding are given for market indices in France, Germany, Hong Kong, Japan and the UK.     

Overreaction and Insider Trading: Evidence from Growth and Value Portfolios

Insider transactions are not random across growth and value stocks. We find that insider buying climbs as stocks change from growth to value categories. Insider buying also is greater after low stock returns, and lower after high stock returns. These findings are consistent with a version of overreaction which says that prices of value stocks tend to lie below fundamental values, and prices of growth stocks tend to lie above fundamental values.     

Microfinance and Household Poverty Reduction: Empirical Evidence from Rural Pakistan

This study examines whether household access to microfinance reduces poverty in Pakistan and, if so, how and to what extent. It draws on primary empirical data gathered by interviewing 1132 households, including both borrower and non-borrower households, in 2008–2009. Sample selection biases have been partially controlled for by using propensity score matching. The study reveals that microfinance programmes had a positive impact on the participating households. Poverty-reducing effects were observed on a number of indicators, including expenditure on healthcare, clothing and household income, and on certain dwelling characteristics, such as water supply and the quality of roofing and walls.     

Relationship between employees’ beliefs regarding training benefits and employees’ organizational commitment in a petroleum company in the State of Qatar

The study examined the relationship between the beliefs of senior staff Qatari national employees regarding training benefits as measured by the benefits of employee training, and employees’ organizational commitment as measured by the three‐component model of organizational commitment. This relationship was assessed through a quantitative associational research design. From the study site, Qatar Petroleum, a total of 283 responses were analysed using stepwise regression analysis. The findings suggest that there is a positive relationship between employees’ beliefs regarding training benefits and employees’ organizational commitment.     

The internationalization of an Arab bank: The case of Ahli United Bank of Bahrain

Ahli United Bank of Bahrain (AUB) has “leapfrogged” over early stages of internationalization by means of multiple rapid acquisitions of competitors. Use of this high‐cost, high‐risk strategy is well known among companies with the resources to invest in international expansion, but its application has not yet been studied in depth among companies based in the Middle East. This theory‐driven case study examines the growth record of AUB, its place in the regional banking industry in the Gulf, and its successful internationalization as an Arab bank. The article concludes with a detailed assessment of managerial and theoretical implications arising from the case study, and proposes further research to understand better the process of internationalization by companies expanding from a base in the Middle East. © 2011 Wiley Periodicals, Inc.     

Bank Consolidation, Internationalization, and Conglomeration: Trends and Implications for Financial Risk

This paper documents trends in bank activity, consolidation, internationalization, and financial firm conglomeration with data on more than 100 countries, and explores the extent to which financial firm risk and systemic risk potential in banking are related to consolidation and conglomeration. The relationship between consolidation, conglomeration and financial risk is documented using financial data on the largest 500 financial firms worldwide and on large banks in about 90 countries. We find that (a) large conglomerate firms did not exhibit levels of risk‐taking lower than smaller and specialized firms in 1995, while they exhibited higher levels of risk‐taking in 2000; (b) highly concentrated banking systems exhibited levels of systemic risk potential higher than less concentrated systems during the 1993–2000 period, and this relationship has strengthened during the 1997–2000 period. We outline research directions aimed at explaining why bank consolidation and conglomeration may not necessarily yield either safer financial firms or more resilient banking systems.     

A note on pro-poor social expenditures

This study extended the concept of ‘pro-poor growth’ in terms of social expenditures that measure whether social expenditures are pro-poor or not pro-poor. Using the idea of pro-poor growth, this study examines as to what extent the poor benefited from the growth of social expenditures i.e., human development, rural development, safety nets and community services. The monotonicity axiom sets out a condition that the proportional reduction in poverty is a monotonically increasing function of the pro-poor growth. This study satisfies the monotonicity criterion relative with social expenditures and proposes a ‘poverty equivalent social expenditure rate’, which takes into account both the magnitude of social expenditures growth and how the benefits of these expenditures are distributed to the poors and the non-poors. This methodology is applied to Pakistan’s unit record household surveys during the periods of 1964–2011 (21 household surveys) and examines the interrelationship between social expenditures, inequality, and poverty. It is argued that the satisfaction of a monotonicity axiom is a key criterion for measuring pro-poor growth. The results found that the social expenditures in Pakistan are not intrinsically pro poor. Although it was strongly pro poor in the 1980s and pro poor in the 1990s, growth in the 1970s and 2000s was anti poor, if the poverty related social expenditures still remains anti-poor in the subsequent years as reflected in the years 2008–2011, there is a likelihood that these expenditures may not trickle down to the poor but instead to the non-poor. It is indicative that to achieve rapid poverty reduction, the poverty equivalent growth rate ought to be maximized rather than the actual growth rate of social expenditures in Pakistan.