Can Sinful Firms Benefit from Advertising Their CSR Efforts? Adverse Effect of Advertising Sinful Firms’ CSR Engagements on Firm Performance

This study investigates corporate social responsibility (CSR) of sinful firms, which refer to ones that are operating in controversial industries, including the production and distribution of alcohol, tobacco, gambling, adult entertainment, firearm, military, and nuclear power. We attempt to answer two questions in this study: (1) Do these sinful firms actively advertise their CSR engagements compared to non-sinful firms? And (2) do their advertising efforts really yield increased financial performance? Positing that advertising not only can make sinful firms’ good deeds visible, but also can highlight the contradiction between these firms’ stigma and their prosocial activities, we claim that sinful firms are likely to advertise their CSR engagement to overcome their stigmatized firm image, but these advertising activities will make the firms’ performance vulnerable by inducing skepticism from stakeholders. Using KLD database in conjunction with COMPUSTAT and Center for Research in Security Prices from 1991 to 2010, where 337 firms are involved in the controversial sinful industries, namely tobacco, alcohol, gaming, firearms, military, and nuclear power, we examine the effect of advertising spending of sinful firms’ CSR engagement on performance vulnerability, which is instantiated with idiosyncratic risk. The empirical results indicate that sinful firms increase their advertising expenditure when they engage in CSR programs, but these efforts for advertising CSR tend to increase idiosyncratic risk. This finding indicates that even though sinful firms can benefit from engaging in socially responsible initiatives, advertising their CSR efforts may backfire.     

Exploring Effects of CSR Initiatives in Strategic Postcrisis Communication Among Millennials in China and South Korea

ABSTRACT

This study explored what types of postcrisis CSR activities can make corporate crisis management effective and why. Eighty-one in-depth interviews with Chinese and South Korean millennials showed that they perceived postcrisis CSR positively even when they perceived an underlying self-serving motive. The interview data also revealed that postcrisis CSR initiatives relevant to the company’s business (CSR fit) and to the crisis at hand were more effective in both countries than the other CSR initiatives. Millennials in both countries valued CSR’s impact (benefiting the society as a whole), continuity (being long-term planned and sustainable), uniqueness (with few precedents), and transparency (fully disclosing detailed information) when evaluating various postcrisis CSR initiatives. Controllability (CSR being under full control of a company) was a significant criterion for South Korean millennials only. Theoretical and practical implications are discussed.     

Examining Chinese College Students’ Intention to Travel to Japan Using the Extended Theory of Planned Behavior: Testing Destination Image and the Mediating Role of Travel Constraints

Understanding the decision-making process and predicting travel behavior are critical for destination tourism marketers. This study develops and tests a structural equation model using the extended Theory of Planned Behavior (TPB) to explain Chinese college students’ intention to travel to Japan. Ten hypotheses were proposed regarding the relationships between destination image, travel constraints, and the original TPB constructs. The results of structural analyses reveal that the extended TPB has better predictive power for travel intention to Japan than the original one. Attitude is found to have the greatest impact on intention to travel to Japan. The mediating role of travel constraints shows a significantly negative effect on the relationships between the predictors and travel intention except for the relationship between perceived behavioral control and travel intention. The results of this study can help improve marketing promotions and the development of more effective destination positioning strategies for Japanese inbound tourism.     

The dual analytic hierarchy process to prioritize emerging technologies

Recently, an analytic hierarchy process (AHP) has been frequently used as a proper tool for a wide variety of decision-making situations in fields such as government, business, industry, healthcare, and education. In this article, we will mainly focus on the use of the AHP to select proper emerging technologies for future R&D at a country level. For successful completion of our project, we propose to use the dual AHP (DAHP) which consists of the regular AHP and the Bayesian type AHP. This DAHP performs useful features when decomposition of the main criteria is desirable but is not technically feasible via the conventional AHP. As an empirical application, appropriate electronic device technologies for future R&D in Korea are found by the DAHP, which reveals that DAHP-led technologies selection (or DAHP-led resources allocation) at a country level is a many-faceted problem.     

Economic shock,owner-manager incentives,and corporate restructuring: Evidence from the financial crisis in Korea

We examine how owner-managers incentives and firm-specific measures of corporate governance affect restructuring decisions during an economy-wide shock. Using a large sample of Korean firms that had experienced a severe financial crisis during 1997–1998, we find that the likelihood of restructuring is negatively related to the divergence of cash flow rights and control rights of controlling shareholders, and that the announcements of restructuring by chaebol firms with such divergence are greeted more negatively by investors. However, firm-specific measures of corporate governance such as total debt, bank loans, and equity ownership by unaffiliated financial institutions mitigate these negative effects, thereby influencing firms to choose value-maximizing restructuring policies. Our results suggest that the controlling shareholders' incentives to expropriate other investors are high during an economic shock. Our results also highlight the importance of corporate governance in mitigating such expropriation incentives, and provide important implications for the role of corporate governance during an economic shock, such as the 2007–2008 global financial crisis.     

The impact of manager's animosity and ethnocentrism on multinational enterprise (MNE) international entry‐mode decision

For MNEs, entry‐mode decision is undeniably critical. While the literature has identified several determinants of foreign entry‐mode choice, few have examined the impact of manager's animosity and ethnocentrism. This article is an attempt to fill this gap by examining the independent effect of manager animosity and ethnocentrism as well as the moderating effect of cultural intelligence on entry mode. Data were collected through surveys targeting upper‐level managers in the U.S., U.K., and Germany to examine how animosity and ethnocentrism would shape their decision to enter Iran, a host market largely perceived negatively in the West. Multivariate multiple regression was used to test the hypothesized effects and to capture the multidimensional aspect of entry modes. We found that, in general, manager's animosity and ethnocentrism do negatively affect the choice of an entry mode and that cultural intelligence has the potential to neutralize that negative effect.     

Incentives of low‐quality sellers to disclose negative information

The paper studies incentives of low‐quality sellers to disclose negative information about their products. We develop a model in which one's quality can be communicated via cheap‐talk messages only. This setting limits the ability of high‐quality sellers to separate, as any communication strategy they pursue can be costlessly imitated by low‐quality sellers. We study two factors that can incentivize low‐quality sellers to communicate their quality: buyers' loss aversion and competition. Quality disclosure reduces buyers' risk, thereby increasing their willingness to pay for the product. It also introduces product differentiation, softening the competition.     

Changes in cyclical patterns of the USA labor market: from the perspective of nonlinear Okun’s law

The validity of Okun’s law has been debated because of the increase in cyclicality in aggregate hours after 1985. To investigate this, I measure Okun’s coefficients in three phases of the business cycle – recession, early, and late expansions. I found that an increased coefficient for aggregate hours is due to the increased responsiveness of the employment rate during late expansions and to the increased responsiveness of hours per employee during early expansions. These findings question the flexible labor market hypothesis focusing on firms’ firing behaviors during recessions. Rather, working hours’ flexibility represents a more prominent feature of the post-1985 USA labor market.     

The Effect of Personnel Characteristics in the Internal Accounting Control System on Discretionary Tax Accruals: Evidence from Korea

This study examines whether the characteristics of personnel in a firm's internal accounting control system (IACS) and auditor characteristics control managers’ discretionary behaviour for tax planning. The study uses a sample of 4210 firm‐year observations from 2006 to 2014. The results show that managers’ discretionary tax planning cannot be controlled when the personnel in charge of internal accounting control are at an optimum level or higher. On the other hand, when a CPA is included among the personnel, the manager's discretionary behaviour is somewhat controlled. Moreover, the results show that firms audited by a large accounting firm also control the manager's discretionary tax planning to some extent. Unlike previous studies that examine the effects of IACS on discretionary accruals mostly in terms of book income, this study's contribution is an examination of the effects of the characteristics of personnel in IACS on the relationship between discretionary book‐tax conformity accruals and discretionary book‐only accruals that can be used when the manager establishes a tax plan. Additionally, this study also provides indirect evidence that the characteristics of auditors and personnel in charge of internal accounting perform a monitoring role that controls the manager's opportunistic behaviour.     

Potential competition and quality disclosure

This study presents a model of quality disclosure in which an incumbent, through its quality and disclosure choices, influences the potential that a new entrant enters the market. In this regard, we consider a sequential framework in which the incumbent chooses its quality and decides whether to disclose it to the market; subsequently, the entrant makes the same decisions, if it enters the market. We show that the potential competition can create strategic incentives for the incumbent to choose nondisclosure, because the availability of information about the incumbent's quality promotes entry by enhancing the entrant's expected profit from the market. In addition, an analysis of the effects of mandatory disclosure laws suggests that they can be effective in encouraging new market entrants and in improving the product quality of established firms.