S&P 500 index addition,liquidity management and Tobin's Q

This study examines the revision in cash holdings and the market valuation of investment opportunities of 475 firms added to the Standard & Poor's 500 (S&P 500) stock market index from 1980 to 2010. We find that newly indexed firms have evolved to significantly lower cash balances, which we partially explain by the decreasing growth opportunities following index inclusion. Consistent with index inclusion loosening financial constraints, we document a larger decrease in cash for index inclusions in sectors with high financial dependence. We sort S&P 500 inclusions by corporate governance quality but do not find any empirical support that changes in cash and Tobin's Q are related to management entrenchment.     

The Relationship Between Individuals’ Recognition of Human Rights and Responses to Socially Responsible Companies: Evidence from Russia and Bulgaria

An emerging body of literature has highlighted a gap in our understanding of the extent to which the salience attached to human rights is likely to influence the extent to which an individual takes account of Corporate Social Responsibility (CSR) in decision making. The primary aim of this study is to begin to address this gap by understanding how individuals attribute different emphasis on specific aspects of human rights when making decisions to purchase, work, invest or support the community operations for socially responsible organisations. In order to achieve this objective, a survey instrument was administered to professionals in Russia and Bulgaria. Our data indicate that there is a significant correlation between individuals’ sensitivity towards different components of human rights and their perceptions of the importance of CSR in decision making. Specifically, the recognition of political rights was strongly associated with the willingness to purchase, invest, seek employment and support socially responsible firms. Our analysis also outlines significant differences between the Russian and the Bulgarian samples with regard to the manners in which individuals rate the importance of civil, political and economic human rights.     

Rethinking Organic Farming in the Post‐Socialist Context: Lessons from Bulgaria

On the basis of an in‐depth qualitative study, this article discusses the case of Bulgaria as an example of a new EU Member State that implemented EU organic farming policies in a top‐down process during EU accession. We explore the difficulties in transposing a concept originating in Western Europe to post‐Socialist countries, and particularly ask what this transposing of an alien concept means for long‐term development of the organic sector. We found that the top‐down agenda‐setting for organic farming in Bulgaria resulted in inefficient policies that inhibited an orientation of producers towards the market's needs. Tacit assumptions underlying the concept of organic farming in Western Europe, such as the relevance of social capital could not be sustained in Bulgaria, which added to the challenges of policy implementation. To increase policy efficiency, we recommend a policy process that involves the expertise of all organic sector actors, including organic operators, but also policymakers, organic organisations, consumers and academic experts. Expertise and knowledge requirements are diverse, touching policy, market, collective action and practice‐oriented skills. Integrating these skills could maximise success in finding the best solution for implementing – and adjusting – a foreign concept meaningfully in a particular local context.     

Do product market threats affect analyst forecast precision?

We examine how product market threats influence the precision of analyst forecasts. Greater competitive threats may make forecasting more difficult by increasing the uncertainty regarding future cash flows and by influencing the quality of financial disclosure. Using a firm-specific measure of product market threats (i.e., fluidity), we find that analysts are more likely to be less precise forecasting earnings for highly fluid firms and that the lack of precision is not fully explained by performance volatility. Our findings further suggest that firms with fluid products have lower accruals quality and that they are more likely to withheld information regarding contract terms and sales from major customers. Cross-sectional analysis further suggests that the effect of fluidity on analyst forecasts is more pronounced when firms have flexibility in disclosure choices. Using significant changes in tariff rates as a quasi-natural experiment, we find that analyst forecast precision is significantly lower following tariff reductions.     

Towards the Development of an Empirical Model for Islamic Corporate Social Responsibility: Evidence from the Middle East

Journal of Business Ethics - Academic research suggests that variances in contextual dynamics, and more specifically religion, may lead to disparate perceptions and practices of corporate social...     

Debt Maturity and Tax Avoidance

This study proposes and empirically tests the argument that creditors are likely to extend debt with a shorter maturity to tax-avoiding firms so that they can frequently re-evaluate tax-related risk in debt contracting. Using effective tax rates and uncertain tax benefits as a proxy for tax avoidance, I find that tax-avoiding firms have a larger proportion of short-maturity debt compared to other firms. The empirical findings further show that firms with unsustainable tax positions and with subsidiaries in tax-haven countries are more likely to employ short-maturity debt. Collectively, the empirical findings suggest that frequent debt renegotiations increase the exposure of tax-avoiding firms to credit supply shocks, contributing to their higher demand for cash.     

Who monitors opaque borrowers? Debt specialisation,institutional ownership,and information opacity

In this study, we suggest that the level of information opaqueness determines the propensity of publicly listed firms to have debt financing from only a few debt types (i.e., debt specialisation). Using accruals quality as a proxy for information opaqueness, we find that the degree of debt specialisation is lower for firms with high-quality accruals. This result is consistent with the notion that information collection and monitoring costs are higher for firms that have higher informational opacity, explaining the tendency towards debt specialisation. We further argue that creditors need not monitor borrowers so closely when they are monitored by institutional owners. The empirical findings support this argument and show that firms with more stable institutional ownership are likely to have less specialised debt types. The empirical evidence is also consistent with the expectation that stable institutional ownership is likely to reduce the demand for monitoring over accruals management. Using S&P 500 membership as an exogenous event driving institutional ownership changes, we further document that debt specialisation is decreasing in accruals quality when institutional investors are expected to have an influence.     

Employer branding and CSR communication in online recruitment advertising

While multiple studies have discussed the importance of corporate social responsibility (CSR) in recruiting, two important but unaddressed questions constrain the understanding and practice of presenting firms’ socially conscious efforts to their prospective employees. First, are companies engaged in CSR communicating their CSR practices effectively in online recruitment advertising? And second, what CSR information should companies include in online job advertisements to improve their employer attractiveness to prospective candidates? The findings of this study show that CSR communication in recruitment advertising is often limited, an ad-hoc practice, and mostly focused on company practices concerning employee participation and development. Even companies with a great CSR reputation take surprisingly little advantage of their CSR image when it comes to attracting job candidates. To improve employer attractiveness, we recommend that human resources managers consider (1) optimizing the structure of online job advertisements by including a company overview section in which CSR information can be presented easily, (2) expanding the scope of CSR dimensions in job advertisements to include environmental performance and community relations, (3) offering information about opportunities for employee engagement with CSR, and (4) adopting a strategic approach to the inclusion of CSR content in online job advertisements.     

Enhancing bank transparency: Financial reporting quality,fraudulent peers and social capital

This study examines the role of social norms in financial markets by relating bank transparency to social capital. Using comprehensive data on commercial banks, we provide empirical evidence that high social capital contributes to more transparent financial reporting, thereby enabling more precise risk assessments and promoting financial stability. We find that the effect of social capital is more pronounced when commercial banks are more complex and disclosure incentives of bank managers are strong. Our results suggest that more opaque reporting by peers explains lower transparency but financial misreporting is less contagious when social capital is high. Our study suggests that social capital can effectively improve reporting transparency when other mechanisms are not effective, thus securing financial system stability.