Corporate social responsibility and Eurozone corporate bonds: The moderating role of country sustainability

In this paper, we empirically examine whether superior performance in corporate social responsibility (CSR) results in lower credit risk, measured by credit ratings and zero-volatility spreads (z-spreads). We are especially interested in how the environmental, social, and governance (ESG) related performance of the corresponding countries moderates this relationship. We find only weak evidence that superior corporate social performance (CSP) results in systematically reduced credit risk. However, we do find strong support for our hypothesis that a country’s ESG performance moderates the CSP–credit risk relationship. Superior CSP is regarded as risk-reducing and rewarded with better ratings and lower z-spreads only if it is recognized by the environment. In addition, we find a reduction of corporate bonds’ z-spreads by approx. 9.64 basis points if the CSP of a company mirrors the ESG performance of the country it is located in.     

Institutional duality and political strategies of foreign-invested firms in an emerging economy

This study investigates how the complex institutional environment surrounding foreign-invested firms (FIEs) affects their corporate political strategies (CPS) in China. Analyses of data on 442 FIEs operating in China show that the relative potency of dual institutional pressure from FIEs’ home and host countries shapes their strategic choices. Institutional factors at the country, region, and firm levels not only affect firms’ adoption of multiple firm-based tactics but also shape their collective-oriented associational activities. Moreover, participation in both foreign and domestic business associations enhances an FIE's adoption of firm-based political tactics, but joining domestic business associations has a stronger effect.     

The impact of equity ownership groups on investment: Evidence from Ukraine

We empirically investigate the impact of different ownership groups on companies’ investment in Ukraine with a novel dynamic investment model where investment is based on present and historical levels of profitability (market-to-book value of equity) and lagged investment. Groups include state, insider, non-domestic, financial and financial and industrial group (FIG) ownership. Contrary to the literature, we find that the past level of profitability significantly affects investment; the majority presence of and increases in state ownership have a negative impact on firms’ investment, as is the case for non-domestic and financial companies’ ownership. Insider and FIG ownership have no impact on investment. We explain the results by the extent of liquidity concerns (hard and soft budget constraints), measured by cash flow interacted with a dummy variable of majority ownership of the respective group, and the extent of asset stripping for the corresponding ownership group and relate them to over- and under-investment, and to the free cash flow or cash constraint hypothesis.     

International investors’ reactions to cross-border acquisitions by emerging market multinationals

How do international investors react to announcements of cross-border mergers and acquisitions (CM&As) by emerging market multinational enterprises (EMNEs)? Using a unique and manually-constructed firm-level dataset, this paper examines the stock price reactions to CM&A announcements made over the period 1991–2010 by Chinese MNEs listed on the Hong Kong Stock Exchange and the wealth impacts of their corporate governance. Our empirical findings confirm a positive stock price reaction on average, and suggest that international investors react positively to the presence of large shareholders, but negatively to the presence of institutional shareholders. There is a negative impact if the largest shareholder is either the State or the corporate founder. We suggest that this is because the international investors perceive potential principal–principal conflicts in such ownership/control constellations and discount equity prices accordingly. We also find that Board size and independence have positive effects on the price reaction, but that large supervisory boards engender negative reactions.     

Does CEO duality constrain board independence? Some evidence from audit pricing

This study examines whether CEO duality affects the association between board independence and demand for higher quality audits, proxied by audit fee. The findings show that there is a positive association between board independence and audit fees. This result is consistent with findings of Carcello et al. (2002) that more independent boards demand higher audit quality and effort. However, this positive association is only present in firms without CEO duality, thus suggesting that CEO duality constrains board independence. The results support recommendations against CEO duality by showing that dominant CEOs may compromise the independence of their board of directors. Additionally, evidence is provided that board size (the number of directors on the board) is positively associated with audit fee pricing. This is consistent with prior studies that indicate that larger board sizes are associated with inefficiency and negative firm performance.     

Political interventions in state-owned enterprises: The corporate governance failures of a European airline

This paper is based on the theory of hybrid organizations and we investigate the context, factors, mediators, and outcome of a public scandal involving a Romanian state-owned company in the civil aviation sector. This retrospective case study is part of a research design that alternates between inductive and deductive procedures devised to test relevant hypotheses, integrate several theories, and construct the causal mechanism of the corporate scandal. Four theories have been selected to address multiple aspects of the case: the hybrid organization theory, the agency theory, the fraud triangle theory, and the legitimacy theory. Several hypotheses have been proposed at the confluence of these frameworks, and the data collection process was conducted to ensure the credibility, dependability, and transferability of results. In addition to the themes and categories that have emerged from the thematic analysis, the paper also uses the process-tracing method to propose a causal graph and an event-history map in support of the hypotheses. The paper puts forward a series of recommendations on how to improve the corporate governance of state-owned enterprises, and to prevent potential scandals. The authors suggest that the separation of ownership and control is beneficial for strategy implementation in state-owned enterprises and can alleviate an entity’s financial difficulties.     

Role of income diversification in reducing forest reliance: Evidence from 1838 rural households in China

Among a number of households worldwide, forest use and income diversification have been seen as substitute livelihood strategies: farmers with more diverse income sources face a higher opportunity cost in harvesting forests and so tend to rely less on forestry resources. The current study uses rural household survey data captured in the Chinese provinces of Fujian, Shaanxi, Hunan, and Jiangxi. It applies a Heckman regression model and a quantile regression model to determine the effect of income diversification on forest dependence. The three main findings of this study are as follows. (1) The mean income diversification index values in Fujian, Shaanxi, Hunan, and Jiangxi are 1.81, 1.46, 1.63, and 2.00, respectively; this indicates that livelihood activities within the study areas are limited. (2) When the income diversification index increases by 10%, the proportion of forest income to total income within the study areas decreases by 4–8%; this indicates that income diversification can significantly reduce a household's dependence on forest resources, especially among the poorest households. (3) For the top 20% of high-income households, the effect of income diversification on forest dependence is insignificant, but for the bottom 20% of low-income households, income diversification has a major impact in terms of reducing their forest reliance (6–10%). The findings of this study will help inform the design of alternative policies that could alleviate pressure relating to forest-resource protection.     

REASONS FOR DELISTING AND CONSEQUENCES: A LITERATURE REVIEW AND RESEARCH AGENDA

This paper discusses the literature on delisting, drawing on USA and international evidence. Given the great heterogeneity in delisting operations, we first consider the standard existing typology based on the initiator of the delisting (the stock market authorities, or the firm itself). Second, while managers often cite high compliance costs (especially due to Sarbanes–Oxley Act implementation) as the official reason for the voluntary delisting of their firm, we highlight that firms face different trade-offs in their delisting decision. We also examine the reasons for involuntary delisting, especially the delisting dilemma faced by stock market authorities when the firm violates the listing requirements. Next, we review the economic consequences of delisting in terms of value creation or value destruction for shareholders. Finally, noting gaps in the literature and other contrasting results, we propose suggestions for future research.     

The influence of risk preferences,knowledge, land consolidation,and landscape diversification on pesticide use

Researchers have spent substantial effort to identify factors influencing pesticide use intensity. However, few studies have compared the relative importance of these factors. This study examines four categories of factors that potentially influence farmers’ pesticide use decisions by evaluating incentivized experiment data, farm survey data, and remote sensing data in China. Our results suggest that land diversification has the largest effect on farmers’ pesticide use. Compared with the most rice-intensive landscape type, less rice-intensive systems cause farmers to spray less on middle rice. Heavy pesticide use intensity is associated with land fragmentation as small-scale farms still dominate crop production. Farmers’ integrated pest management knowledge has significant effects on pesticide use. We also find that loss and ambiguity preferences, rather than risk preferences, are more likely to affect pesticide use intensity.