Cultural diversity and Indigenous participation on Australian corporate boards: Harder but better decisions

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Abstract

This study explores Indigenous Australians' participation on corporate boards. We confirm the significant under-representation of Indigenous Australians on corporate boards. Using data collected from semi-structured interviews with business leaders, we explore their perceptions of cultural diversity and pathways to directorships provided by corporate Australia for Indigenous Australians. Australian business leaders perceive the importance of cultural diversity (particularly in terms of its myriad benefits such as enhanced decision making), acknowledge the problem of limited diversity, and provide insights to improve diversity. Key pathways for Indigenous Australians include skills and experience, education and training, reputation, networking and organisational support.

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.

Risk and ambiguity aversion: Incentives or disincentives for adoption of improved agricultural land management practices?

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Abstract

Farmers grapple with uncertainties related to the adoption of improved agricultural practices. Adoption decisions on these practices may vary in response to risk in which farmers may be able to predict the chances of occurrence on outcomes of their decisions, and/or ambiguity where adoption-decision outcome probabilities are unknown. Also, these uncertainties may emanate from imperfect information on production returns from adoption and adoption-related fixed costs. In this paper, we study whether risk and ambiguity aversion create incentives or disincentives for intensity and duration of adoption of improved agricultural practices. For this, we combine experimental with survey data. We find that ambiguity aversion reduces incentives for high-intensity adoption while risk aversion attenuates this disincentive. As expected, risk aversion increases incentives for longer adoption of improved agricultural practices. Experience was expected to allow farmers to learn enough about payoff probabilities from adoption and render ambiguity aversion less important. Yet, we find it reduces the duration of adoption of soil and water conservation structures, which could be explained by adoption-related high fixed costs. On the other hand, ambiguity aversion appears to matter little with adoption of agroforestry despite the associated high fixed and management costs attributed to integrated agri-silviculture and agro-silvopastoral systems. Given the complementary nature of the practices, agricultural policy should be directed at interventions that attenuate the deterrent effect of ambiguity aversion through providing information related to production returns from the adoption of improved practices that involve high fixed (management) costs.

Separability, spillovers, and segmented markets : Evidence from dairy in India

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Abstract

A long history of empirical research has focused on testing whether and when household consumption and production decisions are separable. If markets were perfect, household consumption would be independent of production. In this article, we propose that market channel choice complicates this relationship. Our analysis of household panel data from rural India, focusing on dairy, leads us to four key conclusions. First, milk consumption is correlated with production, and markets are not a complete substitute for household production. Second, a large presence of formal milk buyers in a village is associated with lower milk consumption in dairy households, overturning the positive association of participation in formal value chains with household milk consumption. Third, contrary to expectations, for households that do not own dairy animals and net buyers, the presence of formal value chains remains uncorrelated with milk consumption. Fourth, we infer, test for and find suggestive evidence of segmented milk markets, that is, different types of households participate in different markets for milk that do not seem to interact with each other. Policymakers focused on market development or production-based strategies need to factor in the possibility of market segmentation based on market channels while designing interventions.

Managerial short‐termism and financial statement comparability

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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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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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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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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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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.