Entrepreneurial inception: The role of imprinting in entrepreneurial action

Recent research highlights that founders' early decisions and the environmental conditions at founding each imprint upon a new venture in ways that affect growth and survival. However, we know much less about how the entrepreneur is imprinted and how the outcome of this imprinting process influences the entrepreneur and the venture. Through semi-structured interviews and content analysis, our study examines entrepreneurs' formative experiences during sensitive periods of transition, which we refer to as sources of imprint. We illustrate how these sources of imprint impact entrepreneurial decision making and explain how they guide entrepreneurs' decisions as they progress through their entrepreneurial careers. In doing so, we improve our understanding of how entrepreneurs navigate the entrepreneurial process.     

Doing good or choosing well? Corporate reputation,CEO reputation,and corporate financial performance

Using data from Taiwan’s top 150 listed companies over the period 2003 to 2014, our study explores the influence of CEO reputation and corporate reputation on the financial performance of companies. The analysis focuses especially on the interaction between CEO reputation and corporate reputation to identify which dimension of reputation is more relevant to firm performance. We show that, though both corporate reputation and CEO reputation have an individual impact that benefits the financial performance of the company, the impact of CEO reputation is more persistent across different time periods and more comprehensive across different industries. Furthermore, we find that CEO reputation still has a positive impact on firm performance when corporate reputation is poor, indicating that CEO reputation is more important to firm performance. To pursue better financial performance, should a company make greater effort to build a good corporate reputation, or merely recruit a CEO with a good reputation? Our suggestion here is simple: “choosing well” is better than “doing good.”     

Target CEO age,ownership decisions,and takeover outcomes

This paper examines the effect of target CEO age, in association with target corporate governance mechanisms, on the ownership decisions and takeover outcomes in eight East and Southeast Asian countries. The results show that acquirers are more likely to select partial-control acquisitions of target firms managed by older CEOs, and that the impact of target CEO age on the partial-control acquisition propensity is much stronger in emerging markets relative to developed economies. The study further finds that target CEO age leads to a lower probability of obtaining desired equity ownership levels compared to unmatched ownership achievements, controlling for target corporate governance structures. The findings also run robustness checks regarding variations in the compulsory acquisition cut-off in the sample countries. Overall, this paper adds to the growing of mainstream corporate governance literature regarding the relevance of CEO personal characteristics in agency problems for corporate decisions.     

The effect of the Rana Plaza disaster on shareholder wealth of retailers: Implications for sourcing strategies and supply chain governance

Supply chain and reputational risks are often assumed to motivate firms to source production in developed, high-cost countries rather than developing, low-cost countries. To examine this assumption, we provide evidence from the collapse of the Rana Plaza building on April 24, 2013, which with its 1133 fatalities and 2438 injuries is seen as one of the worst industrial accidents in history. Do markets reactive negatively enough to such events to motivate firms to shift their sourcing strategy? We analyze the stock market reaction to the Rana Plaza disaster in the Bangladeshi ready-made garment industry to address this question. Our analysis is based on a sample of 39 publicly traded global apparel retailers with significant garment sourcing in Bangladesh. Stock market reaction to retailers on the day of the Rana Plaza disaster is negative, but its magnitude and significance dissipate by the following day. We find no evidence of significant stock market reaction during the 11 trading days (approximately two weeks in calendar time) following the disaster. Retailers responded to the disaster by developing two different agreements to improve factory and worker safety in Bangladesh – the Accord on Fire and Building Safety in Bangladesh (AFBSB), and the Alliance for Bangladesh Worker Safety (ABWS). We find no evidence of significant stock market reaction to the announcements of the AFBSB and the ABWS. The insignificant negative economic impact from the Rana Plaza disaster suggests that retailers have little economic incentive to move sourcing out of Bangladesh or other low-cost countries so as to reduce the risk of being involved in such events. We discuss the implications of our results for retailers, non-governmental organizations (NGOs), garment factory owners in Bangladesh, the Bangladeshi government, and academic researchers.     

Corporate Credit Spreads and the Sovereign Ceiling in Latin America

We exploit a panel of 72 US dollar-denominated bonds issued by Latin American publicly listed firms between 1996 and 2004, a period of regional financial crises, to answer the following three questions: (1) Is sovereign risk a statistically and economically significant determinant of the corporate credit spread, controlling for firm- and bond-specific characteristics? (2) If yes, do market participants apply the sovereign ceiling rule adopted by rating agencies in the pricing of our bond market data? And (3) how do market views compare with the rating agencies ceiling policy for each corporate bond? We find strong evidence of an economically and statistically significant effect of sovereign risk on corporate spreads across different panel econometric specifications and bonds. Moreover, markets do not apply the ceiling rule in 77–90% of the bonds we sample and these findings are consistent with rating agencies’ policies toward the latter for about 50% of the firms. These results are robust to the inclusion of firm- and bond-specific variables derived from the structural approach to credit risk and to the business cycle in each country.     

Executive compensation among Australian mining and non-mining firms: Risk taking,long and short-term incentives

How firms determine the pay of their executive employees is a vital research area. In the Australian context, mining firms form a large portion of listed companies. These miners tend to have more volatile earnings, operate with less certainty and higher risk in relation to capital investment. We look at a sample of ASX listed miners and non-miners from 2005 to 2013. We note that miners pay their CEOs less (AUD 1 m vs AUD 1.5 m for non-miners) overall. However, we also note that miners tend to use enhanced contingent long-term remuneration arrangements to significantly boost the pay-performance relationship compared to non-miners particularly during the pre-GFC period. Curiously, non-miners tend to have more generous short-term contingent arrangements linking executive pay and performance. The GFC, as an event, has adversely impacted these arrangements, lessening the generosity of pay-performance among miners, while enhancing these arrangements among non-miners. Overall, the results of the study provide support for optimal contracting theory and do not generally support the managerial power approach for both mining and non-mining firms.     

Philanthropic giving,market-based performance and institutional ownership: Evidence from an emerging economy

This paper investigates the association of philanthropic giving with market-based performance and institutional ownership using data from banks in Bangladesh from 2007 to 2013. Our findings suggest that banks with a higher level of philanthropic giving achieve better performance, with a positive association also found between philanthropic giving and institutional ownership. This implies that institutional owners invest in banks that contribute more to philanthropic activities. These findings should be of interest to managers, regulators and policy makers in countries that share similar financial and socio-economic systems.     

Do CSR actions in retailing really matter for young consumers? A study in France and Norway

This research explores how young consumers perceive Corporate Social Responsibility (CSR) actions of French and Norwegian food retailers, and how these actions affect brand image, brand associations (adjectives, verbs, and names) and consumer–retailer relationships. It uses a qualitative methodology with in-depth interviews. This exploratory study shows that French and Norwegian young consumers have problems linking CSR with food retailing, and they question retailers' true commitment to CSR. Young French consumers had stronger brand associations than young Norwegians. Therefore, we argue that, CSR commitment among retailers in both countries is likely to positively affect retailer brand image. Nevertheless, CSR related products could also be associated with higher prices and may exclude low-income consumers.     

Variance decomposition of the country,industry, firm,and firm-year effects on dividend policy

Why some firms distribute generous cash dividends while others are reluctant to do so remains an unanswered question despite decades of scholarly examination. Although the extant literature on dividend policy has explored the effects of determinants at the country, industry, firm, and firm-year levels, it remains unclear whether and how much each level of analysis matters to dividend policy. Consequently, this study seeks to move the literature forward by decomposing the variance at each level associated with dividend policies in a global sample of 8903 firms over an 11-year time period. We employ hierarchical linear modeling and find that all four levels of analysis help to explain dividend policy, but the firm and firm-year effects account for the majority of variance. Furthermore, decomposing the variance within each year reveals that the firm level has the strongest effect on dividend policy. Finally, while the variance in dividend policy explained by each level varies according to the dividend policy measure used, it is largely stable over our study period. We discuss implications of these findings for future research on dividend policy and for the field of comparative corporate governance.     

INTERNATIONAL CORPORATE TAX AVOIDANCE: A REVIEW OF THE CHANNELS,MAGNITUDES, AND BLIND SPOTS

This paper reviews the rapidly growing empirical literature on international tax avoidance by multinational corporations. It surveys evidence on the main channels of corporate tax avoidance including transfer mispricing, international debt shifting, treaty shopping, tax deferral, and corporate inversions. Moreover, it performs a meta-analysis of the extensive literature that estimates the overall size of profit shifting. We find that the literature suggests that, on average, a 1 percentage-point lower corporate tax rate will expand before-tax income by 1%—an effect that is larger than reported as the consensus estimate in previous surveys and tends to be increasing over time. The literature on tax avoidance still has several unresolved puzzles and blind spots that require further research.