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Valuation Implications of Mandatory CSR Expenditure in India
We examine the value-relevance of corporate social responsibility (CSR) expenditure utilizing the Indian setting of mandatory CSR spending regulation which commenced in 2014. India is the only country where regulators mandate both CSR reporting and spending. Our interest is in two types of firms that meet the minimum specified thresholds: firms that voluntarily made CSR expenditures pre-regulation (voluntary spenders) and firms that did not (forced spenders). This separation in revealed preference allows researchers and investors to observe, at least on average, a firm's true CSR strategy type (proactive/leader versus reactive/follower) through their pre-regulation expenditure strategy. This unique quasi-experimental setting allows us to investigate whether CSR spending is positively associated with shareholders’ value, both when spending was voluntary pre-regulation (for voluntary spenders) and after it became mandatory post-regulation (for voluntary and forced spenders). We find that for voluntary spenders, the markets assess CSR expenditure as valuation-enhancing pre-regulation, but post-regulation the valuation benefits are significantly weakened. The market's assessment is that a forced spender's (imposed) CSR expenditure is, on average, less valuable than that of voluntary spenders, consistent with such spending being viewed as a form of corporate taxation. Further, we find that shortfalls from the required spending amount are penalized by the market for voluntary spenders but rewarded for forced spenders. We also find that advertising appears to play an important communication role both pre- and post-regulation. We view the results as being consistent with the notion that mandated expenditures are viewed differently than those made voluntarily.
Expectations Formation, Sticky Prices, and the ZLB
Abstract
At the zero lower bound (ZLB), expectations about the future path of monetary or fiscal policy are crucial. We model expectations formation under level-k thinking, a form of bounded rationality formalized by García-Schmidt and Woodford (2019) and Farhi and Werning (2019), consistent with experimental evidence. This process does not lead to a number of puzzling features from rational expectations models, such as the reversal puzzle, or implausible large fiscal multipliers. Optimal monetary policy at the ZLB under level-k thinking prescribes keeping the nominal rate lower for longer, but short-run macro-economic stabilization is less powerful compared to rational expectations.
A neuro-structural framework for bankruptcy prediction
Breaching, Bridging, and Bonding: Interweaving Pathways of Social‐Symbolic Work in a Flanked Healthcare Movement
Abstract
This article explores how heterogeneous and distributed forms of social-symbolic work combine over time to yield synergistic relationships that precipitate institutional change. We study a collective effort by patient activists to change the technological and regulatory standards of Type 1 diabetes care. We offer contributions to radical flank theory by conceptualizing radical and moderate flanks as dynamic and overlapping pathways of action rather than fixed actor positions, and we show how a medial ‘bonding’ pathway can provide important social glue to connect the radical and moderate flanks. While in our case the material and discursive ‘hacking’ work in the breaching pathway disrupted institutions, triggered technology innovation, and created momentum for change, material and relational ‘bridging’ embedded these efforts into existing institutional structures and longer-term innovation trajectories. Values and amplification work in the bonding pathway served to keep the two other pathways aligned over time. By addressing how a complex social problem – patient-centric innovation – may be affected through heterogeneous social-symbolic work that leads to institutional accommodation, our study holds considerable policy and societal relevance.
Cross‐Border Knowledge Transfer in the Digital Age: The Final Curtain Call for Long‐Term International Assignments?
Abstract
Digital technology has altered how multinational companies (MNCs) transfer knowledge across borders. With digital communication media (DCM), knowledge exchange can become more cost-effective, thereby reducing the need for face-to-face exchange. DCM's influence on long-term international assignment management for cross-border knowledge transfer remains unclear. Based on 71 interviews with German human resource (HR) managers and subsidiary HR counterparts, we investigated the use of DCM to exchange knowledge across country borders. Exploring these conditions alongside HR managers’ unique perspective on global mobility management prior to and during the global COVID-19 pandemic, we present two major findings. First, 12 facilitating conditions are necessary for digital knowledge transfer across borders to be accepted as a valuable alternative to long-term international assignments. Second, we identified individual connections between facilitating conditions and found that five conditions decreased in relevance, while the remaining seven became core aspects of successful digital knowledge transfer during COVID-19 and possibly beyond.
Different Feathers Embedding Together: Integrating Diversity and Organizational Embeddedness
Abstract
Despite the increase of demographic diversity in organizational environments, little is known about how and why employees from distinct demographic backgrounds (e.g., gender, race, and/or ethnicity) become embedded in their work organizations, which is a reason why employees stay and perform in their jobs. To address this research gap, we integrate job embeddedness and social identification/self-categorization theories and draw from critical diversity studies to theorize on the effects of varying degrees of demographic diversity on the organizational embeddedness of diverse talent. Specifically, we theorize on how monolithic, pluralistic, and multicultural organizational stages, reflecting distinct degrees of heterogeneity, structural integration, and inclusion, affect the process by which employees from both dominant and marginalized social groups develop organizational embeddedness dimensions – links, fit, and sacrifice – with a distinct nature, order, degree, and speed. We further theorize how inclusive leadership can promote organizational embeddedness of employees from all social groups in the three organizational demography stages.
Configuring International Growth of Emerging Market Multinational Enterprises: A Compositional Springboarding View in the Context of India
Abstract
The rapid international growth of emerging market multinational enterprises (EMNEs) has become widely researched in the international management field. The compositional springboarding view (CSV) provides a theoretical understanding of amalgamation-ambidexterity-adaptability elements that impact EMNEs' internationalization. Here we utilize the CSV to conduct a configurational analysis of factors explaining Indian firms' rapid international growth. Using fuzzy-set qualitative comparative analysis (fsQCA) of a survey-archival data set matched with a sample of listed manufacturing firms from India, we identify five configurational solutions for Indian multinational enterprises (MNEs) to achieve international growth. We further develop a taxonomy of Indian MNEs' CSV configurations supporting rapid international growth that we name as amalgamator, adapter, augmentor, explorer, and springboarder. Through the configurational approach, we extend the EMNE literature in the international management field by exploring the efficacy and complementarity of compositional springboarding factors that enable Indian MNEs' rapid international growth. We also contribute to the organization theory and strategy literatures by addressing the tension alleviation between reconfiguring existing resources and creating new ones. Our theoretical extension opens new opportunities for CSV to guide strategic analyses across various resource reuse and creation scenarios.
Production similarity and the cross‐section of stock returns: A machine learning approach
Abstract
This paper employs a machine learning approach to capture firm-pair production similarity, which depicts how firms' production processes resemble each other using textual data in corporate MD&As. We show that production-linked firms' average return has strong predictive power on focal firm's future stock return. A hedging portfolio yields an annualised return of 11.69%, which cannot be subsumed by existing factor models. For mechanism tests, we find that the main findings are stronger in firms with higher information asymmetry and higher costs of arbitrage. The production-linkage measure also predicts future unexpected earnings, suggesting it possibly includes valuable information on firm fundamentals.
ESG news spillovers across the value chain
Abstract
We document the impact of ESG shocks on the stock returns of suppliers and clients of affected firms. Our empirical analysis of US stocks, along with their global clients and suppliers, reveals that ESG shocks are integrated into prices intradaily and that the cross-effect between shocks and ESG levels is statistically significant. The indirect diffusion of ESG shocks to customers' and suppliers' returns is also significant, but takes more time (a few days) and is less pronounced. Finally, the impact is stronger for small firms and for corporations that benefit from less media coverage. In addition, effects are more pronounced in the recent period (posterior to 2017), possibly due to increased investor attention toward sustainability.