Category Archives: RESEARCH ARTICLE

Corporate social responsibility disclosure, dividend payments and firm value – Relations and mediating effects

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Abstract

We examine the relations between corporate social responsibility (CSR) disclosures, dividend payments and firm value. We use an international sample and measure CSR disclosures based on Global Reporting Initiative (GRI) disclosure levels, which we divide into two parts (unexpected and expected disclosures). We find three main results. First, firms with higher levels of unexpected CSR disclosure pay higher dividends, and this association is attributable to firms where unexpected CSR disclosure is aligned with CSR performance. Second, only the unexpected part of CSR disclosures is positively associated with share prices. Third, this positive association is fully mediated by dividends.

Does patent infringement litigation affect stock price crash risk? Evidence from China

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Abstract

Previous studies have examined the determinants of stock price crash risk. However, extant literature overlooks the relationship between patent infringement litigation and stock price crash risk. Based on a dataset of Chinese firm-year observations for the period 2007–2021, we fill the gap by examining how patent infringement litigation affects stock price crash risk and the underlying channels through which this effect occurs. We provide robust evidence that corporate patent infringement litigation increases its risk of one-year-ahead stock crash. This unfavourable effect is more pronounced in firms that were involved with invention patent infringement lawsuits, lost a patent litigation case, suffered from larger litigation costs and are defendant firms. The channel analysis confirms that increased information risks and exacerbated financial constraints are two plausible channels explaining how patent infringement litigation leads to stock price crash risk. Finally, we find that effective corporate governance and risk-taking level are conducive to mitigate the unfavourable effect of patent infringement litigation on stock crash risk. This study enriches the literature on stock price crash risk from the perspective of patent infringement litigation.

Managerial short‐termism and financial statement comparability

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Abstract

This study examines the association between managerial short-termism and financial statement comparability. Using a short-termism measure constructed through textual analysis and machine learning based on a Chinese language setting in management discussion and analysis (MD&A), we find that firms with higher short-termism produce financial statements with lower comparability and that this effect disappears in short-horizon industries. We further find that the increased comparability is associated with an improvement in analysts' forecasts only in non-short-horizon industries. Overall, our findings suggest that firms with greater managerial short-termism are more likely to have unusual corporate behaviours, thus having worse comparability with other firms.

Higher‐order moments and asset pricing in the Australian stock market

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Abstract

This paper investigates a set of realised higher-order co-moment risk–return relationships in the Australian stock market. We test the predictive power of the asset pricing model by implementing the two-, three-, four-moment Capital Asset Pricing Model. Our findings show that investors respond differently to information related to realised higher-order co-moments, and that the corresponding gamma (normalised co-skewness) and kappa (normalised co-kurtosis) risk factors remain priced in the presence of continuous beta and jump beta. Furthermore, we find that the realised high-order co-moment risk measures are priced differently and remain significant even when combined with a set of firm characteristics.

How does credit information sharing affect trade credit? Evidence from China

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Abstract

This paper investigates how credit information sharing affects corporate trade credit financing. Utilising the difference-in-differences method, we find a significant reduction in trade credit for infra-marginal bank borrowers following the introduction of the Chinese National Enterprise Credit Information Publicity System (NECIPS). To reveal the mechanisms underlying the reduction in trade credit, we show that the NECIPS alleviates information asymmetry and increases formal finance access. This financing substitution effect is magnified by weak bargaining power in product markets. Our findings complement the literature on the determinants of trade credit and underscore the indispensable role of the public credit registry.

Director awards and board effectiveness

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Abstract

We explore the impact of prestigious director awards on effectiveness in setting CEO compensation. Consistent with the positive announcement effect for firms with awardees, CEO compensation aligns more closely with shareholder interest and includes enhanced risk-taking incentives for boards with awardees. The effect is most pronounced when the awardee is on the compensation committee or a committee chair, and results are robust to a 2SLS estimation using an instrumental variable based on connections to prior award winners. We find evidence that both additional prestigious board appointments and enhanced scrutiny of firms with awardees are channels for improvements in CEO compensation.

Business strategy and strategic deviation in accounting, finance, and corporate governance: A review of the empirical literature

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Abstract

We review the empirical archival literature on the consequences of business strategy and strategic deviation on accounting, finance, and corporate governance outcomes. We use Miles and Snow's (Organizational strategy, structure, and process. McGraw-Hill, 1978; Organizational strategy, structure and process. Stanford University Press, 2003) strategy typology that has been quantified using financial statement data by Bentley et al. (Contemporary Accounting Research, 2013, 30, 780). Research has used this strategy score to investigate the consequences of firms following two distinct strategies namely, prospectors versus defenders, on various organisational outcomes. Our survey provides mixed evidence on the relationship between business strategy, financial reporting quality, finance outcomes, and corporate governance including corporate social responsibility (CSR) activities. We offer some suggestions for future research.

More on the relationship between interdisciplinary accounting research and citation impact

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Abstract

Using multiple indicators of interdisciplinarity (variety, balance, and disparity), this study examines 1613 references cited in articles published between 1976 and 2018 in six highly regarded accounting research journals (Accounting, Auditing and Accountability Journal (AAAJ), Accounting, Organisations and Society (AOS), Management Accounting Research (MAR), Journal of Accounting and Economics (JAE), Journal of Accounting Research (JAR), and The Accounting Review (TAR)). The findings are threefold: the interdisciplinarity of cited references is low compared with the reported findings in the non-accounting disciplines; there is no discernible change in the level of diversity during the sample period; and the level of citations is negatively related with the dimensions of diversity.

Do venture capitalists with foreign experience drive corporate social responsibility better? Evidence from China

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Abstract

Using a manually collected dataset, we examine the effects of venture capitalists with foreign experience on firms' corporate social responsibility (CSR) engagement. By analysing firm-, deal- and venture capitalist-level samples, we find that venture capitalists with foreign experience significantly improve their portfolio firms' CSR; this finding holds across extensive robustness tests. Venture capitalists with foreign experience promote CSR more significantly if they join the board of directors or invest in the firm's early stages. Our results suggest that venture capitalists with foreign experience transplant the client demands, management practices and social norms they have experienced abroad to their firms.

Labour marketisation level and corporate labour investment efficiency: Evidence from China

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Abstract

This study investigates the effect of labour marketisation level on corporate labour investment efficiency. Using a sample of Chinese listed firms, we provide evidence that higher labour marketisation level is associated with higher corporate labour investment efficiency. Firms with higher labour marketisation level reduce over-investment and under-investment in labour. In the cross-sectional tests, we discover that this effect is more prominent for private enterprises and firms with stronger product market competition, more financing constraints, and higher labour adjustment costs. We eliminate the impact of other non-labour investments and ensure that our results are not driven by these investments.