Does it really pay to do better? Exploring the financial effects of changes in CSR ratings

Previous literature on the link between corporate social responsibility (CSR) and financial performance has focused mainly on the financial implications of a firm’s level of CSR without considering the potential effects on financial performance of variations in CSR rating. We try to fill this gap by studying whether variations in a firm’s CSR rating affect systematic risk, firm value, and portfolio performance. First, our results show that an increase in firms’ CSR efforts, as reflected by an increase in their CSR ratings, significantly reduces systematic risk. Second, a positive variation in CSR ratings significantly improves firm value. Finally, from a portfolio perspective, a strategy that consists of buying stocks that have experienced a CSR ratings increase and selling stocks that have experienced a CSR ratings decrease (or remain stable) leads to lower financial performance. Taken together, our findings provide new evidence and financial implications for firms and portfolio managers.     

Gender difference in the impact of retirement on cognitive abilities: Evidence from urban China

This paper examines the impact of retirement on cognitive functioning by gender in urban China and investigates the underlying mechanisms. Based on data from the China Health and Retirement Longitudinal Study, the paper uses the mandatory retirement ages and different policy enforcement between the public and private sectors as instruments for retirement status. The analysis finds substantial gender heterogeneity in the effect of retirement on cognition, with a positive and significant effect for males, but a negative and less significant effect for females. The beneficial effects on cognition are stronger for male blue-collar workers, who are likely to pursue a more active lifestyle at retirement. Further investigation shows that the results are partly driven by differential behavioral changes at retirement, and the gender difference in retirement ages may also play a potential role.     

Firm performance,corporate governance and executive compensation in Pakistan

This study examines the effects of firm performance and corporate governance on chief executive officer (CEO) compensation in an emerging market, Pakistan. Using a more robust Generalized Method of Moments (GMM) estimation approach for a sample of non-financial firms listed at Karachi Stock Exchange over the period 2005–2012, we find that both current- and previous-year accounting performances has positive influence on CEO compensation. However, stock market performance does not appear to have a positive impact on executive compensation. We further find that ownership concentration is positively related with CEO compensation, indicating some kind of collusion between management and largest shareholder to get personal benefits. Inconsistent with agency theory, CEO duality appears to have a negative influence, while board size and board independence have no convincing relationship with CEO compensation, indicating board ineffectiveness in reducing CEO entrenchment. The results of dynamic GMM model suggest that CEO pay is highly persistent and takes time to adjust to long-run equilibrium.     

The effect of a wife’s retirement on her husband’s mental health

This article examines the effect of wives’ retirement on their husband’s mental health in Australia. By exploiting the exogenous variations in women’s retirement induced by the age pension qualifying ages, we find that spousal retirement status has a positive impact on the mental health of older men. This beneficial impact is found to strengthen with wives’ time spent in retirement. We show that wife’s retirement affects the constituents of her husband’s mental well-being in different ways. We also have identified four channels for the positive linkage between older women’s retirement and the mental health of their spouse.     

The role of top management team diversity in shaping the performance of business model innovation: a threshold effect

Business model innovation is one of the firm’s most important strategic decisions. Top management team (TMT), as the critical decision-makers, has essential influence upon such decisions. However, the role of TMT diversity in shaping the performance of business model innovation is less explored in the literature. Based on a sample dataset of 906 observations of small and medium enterprises from China Startups Stock Market during the period of 2009–2011, we find that TMT diversity exhibits a significant threshold effect on the relationship between business model innovation (in terms of novelty-centred and efficiency-centred business model) and firm performance. More specifically, when TMT functional diversity arrives at a certain level, the positive relationship between novelty-centred business model and firm performance becomes more pronounced. On the other hand, the positive relationship between efficiency-centred business model innovation and firm performance will be more significant when TMT tenure diversity increases to a certain level.     

The dynamic impact of intellectual capital on firm value: evidence from China

We examine the dynamic relationship between intellectual capital (measured by human capital and organizational capital) and firm value of Chinese listed firms. We do causality identification using system GMM and IV estimation, and find no significant relation between human capital and firm value, but organizational capital positively affects firm value with a lag. Our findings are robust to firms with different property rights, of different sizes, or in different industries, with the only exception of capital-intensive firms, in which human capital has a significant influence on firm value. The results imply that the improvement of organizational system plays a more important role in raising the value of a firm in a typical developing country, like China.     

Does default point vary with firm size?

This article aims to improve the predictive ability of KMV model by distinguishing firm size. The evidence suggests that default point would vary with firm size. Using the method of particle swarm optimization, we obtain the optimal default point separately for large firms and small firms. Several statistical tests such as the model confidence set methodology show that our relatively tractable model is more likely to have the strongest predictive ability.     

Technological development at the boundaries of the firm: a knowledge‐based examination in drug development

This paper examines how the knowledge‐based view (KBV) can be applied to firm boundary decisions and the performance implications of those decisions. At the center of the paper is a theoretical and empirical examination of how firms most efficiently organize for technological development. We find that distinct organization approaches are advantaged in the speed of technological development depending on the structure of technological development problems and the depth of firms' technological area experience. We make theoretical and empirical contributions to KBV research that examines knowledge development and transfer. Drug development in the pharmaceutical industry serves as our empirical setting. Copyright © 2012 John Wiley & Sons, Ltd.     

Customer capabilities,switching costs,and bank performance

Customers develop switching costs when they invest time and effort to develop capabilities required to optimally use a given product. Such capabilities are likely to be firm specific and cannot be transferred perfectly to competitors' product offerings. Customers who face switching costs are likely to remain with the same firm and consume complementary products that meet their needs. Thus, firms can achieve competitive advantage by exploiting customers' switching costs. In this paper, we hypothesize that the extent to which firms can benefit from customers' switching costs is contingent upon the firms' internal cross‐selling capabilities. We use online banking data to test our hypotheses and find that customers' switching costs contribute to banks' profitability only in the presence of high levels of internal cross‐selling capabilities. Copyright © 2012 John Wiley & Sons, Ltd.     

企业边界变迁的产业组织演化

交易成本理论从成本角度分析企业边界形成与变迁,企业能力理论则采用比较利益的方法从收入角度分析.短期中,如果企业能力有很大的差异,交易成本降低,位于价值链中上下游的企业将趋于专业化生产;如果企业能力均匀分布,交易成本降低,对专业化生产没有影响.长期中,企业能力、交易成本、企业边界形成互动循环的演化机制,并且在竞争过程中实现自然选择,引起产业组织演化.