Essays in corporate risk

This thesis explores the dynamic interplay between risk-taking behaviors, corporate sustainability, and corporate governance mechanisms. The first paper demonstrates a causal effect of CEO career concerns on reduced corporate risktaking using regression discontinuity design. It finds that career-concerned CEOs exhibit risk aversion, influencing corporate policies toward safer investments, higher cash reserves, and increased dividends. The second paper illustrates how CEOs facing career anxieties undertake ESG reputational risk management, compromising long-term ESG performance. The third paper shows that higher director nomination eligibility criteria causally reduce stock price crash risk, an effect amplified in non-state-owned firms with lower executive control, volatile share prices, and more retail investors. Collectively, the thesis makes academic contributions to empirical finance and offers practical insights into corporate risk management and investment risk identification for executives, policymakers, and regulators

Valuing “Green” How “Going Green” Affects a Company’s Stock Price

Environmentally conscious decision making has become a prominent topic in business that has the potential to affect the public opinion and performance of companies. This project seeks to identify whether or not positive changes in excess return might offer an incentive for companies to adopt green initiatives. It examines the ways in which companies’ green initiatives, as measured by their annual Carbon Disclosure Project S&P 500 Climate Change Report score, impact their stock price. In other words, is there value in “going green”? It is hypothesized that companies exhibiting greater variance in their environmental initiatives from one year to the next (whether positive or negative) will see larger impacts on their stock price surrounding the release date of the rankings. This paper is an event study comparing the magnitude of the change in a company’s annual Carbon Disclosure Project (CDP) score to the magnitude of their percentage excess return change in stock price. In the end, the hypothesis was not proven to be true because the results were not statistically significant

The mediating effect of stakeholder influence capacity on the relationship between corporate social responsibility and corporate financial performance

Corporate social responsibility (CSR) and corporate financial performance (CFP) has been examined extensively in the literature.Majority of the studies suggested a positive relationship and few others found neutral, negative and/or curvilinear relationships.Hence this development calls for a mediating mechanism on the relationship between CSR and CFP.This paper proposes to provide a framework that explains how and why CSR leads to CFP by promoting a potential mediator namely stakeholder influence capacity (SIC).Based on the literature reviewed, this paper proposes three variables which can be used to implement the framework at firm level. The variables are corporate social responsibility, stakeholder influence capacity and corporate financial performance

IMPACT OF CORPORATE SOCIAL RESPONSIBILITY PRACTICES ON FINANCIAL PERFORMANCE: EVIDENCE FROM SELECTED MENA REGION COMMERCIAL BANKS

Nowadays, corporations are being held accountable for their actions that affect their surroundings. Thus, corporate social responsibility (CSR) has been integrated in their business models, which can impact their financial performances (FP). Previous researches regarding the relationship between CSR and FP have yielded mixed results. Thus, this research aims at identifying the impact of CSR practices in the environment (ENV), human resources (HR), products and consumers (PC) and community involvement (CI) on FP of 81 commercial banks operating in selected MENA countries for the year 2018. Data were gathered from CSR report and annual report for each bank. The multiple regression analysis reveals that there is a positive significant relationship between CSR practices in HR and PC and FP of MENA banks. However, there is a non-significant relationship between CSR practices in the ENV and CI and FP of these banks. Thus, MENA banks are encouraged to engage in CSR practices revolving around HR and PC in order to enhance their FP

The Analysis of CSR Reports of Serbian Companies

Doing business based on the concept of the CSR could lead to competitive advantage, especially through image improvement, higher customer loyalty, increasing motivation and satisfaction of employees and attracting investments. The pressure which different stakeholders put on Serbian companies is incomparably lower than in developed countries. At the same time, socially responsible companies are not sufficiently recognized at domestic market. Implementation of CSR is relevant for investors also, because investors beside financial indicators pay attention to companies\u27 behavior in society and its contribution to social goals. CSR report is the primary communication tool used to indicate company’s CSR strategy and actions concerning its’ social and environmental commitment. The weakest point in CSR systems of Serbian companies is reporting about non-financial performances. This paper is a result of comparative analysis of CSR reports of Serbian companies (15 companies). The main goals were to show which fields companies consider the most relevant and how they contribute to social problems solving. Given that CSR reporting is not mandatory, large number of companies does not prepare CSR reports, because they do not realize the need and the purpose of these reports. The results could raise awareness about CSR reporting among Serbian companies. This work is licensed under a&nbsp;Creative Commons Attribution-NonCommercial 4.0 International License.</p

The Analysis of CSR Reports of Serbian Companies

Doing business based on the concept of the CSR could lead to competitive advantage, especially through image improvement, higher customer loyalty, increasing motivation and satisfaction of employees and attracting investments. The pressure which different stakeholders put on Serbian companies is incomparably lower than in developed countries. At the same time, socially responsible companies are not sufficiently recognized at domestic market. Implementation of CSR is relevant for investors also, because investors beside financial indicators pay attention to companies\u27 behavior in society and its contribution to social goals. CSR report is the primary communication tool used to indicate company’s CSR strategy and actions concerning its’ social and environmental commitment. The weakest point in CSR systems of Serbian companies is reporting about non-financial performances. This paper is a result of comparative analysis of CSR reports of Serbian companies (15 companies). The main goals were to show which fields companies consider the most relevant and how they contribute to social problems solving. Given that CSR reporting is not mandatory, large number of companies does not prepare CSR reports, because they do not realize the need and the purpose of these reports. The results could raise awareness about CSR reporting among Serbian companies. This work is licensed under a&nbsp;Creative Commons Attribution-NonCommercial 4.0 International License.</p

The Behaviour of Corporate Actors. A Survey of the Empirical Literature

Much of behavioural research, both in economics and in psychology, is limited in one respect: it tests isolated individuals. In many practically relevant situations, there are discernible actors, but these actors are not individuals. Rather firms, regulatory bodies, associations, countries or international organisations become active. The social problem at hand is best understood if one attributes judgement and decision making to higher level aggregates of individuals. Which elements from the rich body of behavioural evidence transfer to these corporate actors? Are there other deviations from the predictions of the rational choice model, not present or studied in individuals? This paper surveys the empirical literature from experimental economics, psychology, sociology and law. While some building blocks, like the behaviour of managers and of ad hoc groups, are relatively well understood, our knowledge about the effects of more elaborate internal structure on the dealings of corporate actors with the outer world is still relatively limited.Behaviour, Firms, Organizations, Associations, Groups

The relationship between CSR activity and sales growth in the UK retailing sector

The study examined the relationship between corporate social responsibility (CSR) and sales revenue of two retail companies (Marks & Spencer and Tesco) in the UK to understand how CSR activities can influence retail sales growth. Prior studies have used different theoretical and methodological approaches to report the relationships between CSR and financial performance generally as positive, negative, mixed or neutral, and these are yet to be conclusive. Clarifying the existing inconclusive results, we deduced donations, community work and environmental responsibility CSR activities from the literature and mapped them out onto sales revenue to formulate conceptual propositions. We extracted the corresponding data from Marks & Spencer's and Tesco’s websites and financial reports, focusing on their 2006-2014 activities, and statistically analysed the longitudinal data with Pearson correlation coefficient. The findings revealed positive correlations between donations and sales revenue for the two companies, which suggest that retailers’ philanthropic activities can boost sales levels overtime. Whereas the findings on the community work and the environmental-friendly activities relate either positively or negatively to sales revenue for the companies. There is an indication for retail managers to pursue philanthropic activities to effect sales growth. Retailers exhibiting features of Marks & Spencer can commit to community investment to increase revenue over time whereas those showing features of Tesco can pledge environmental-friendly strategies to influence a stronger correlation between carbon emissions and sales revenue levels. The outcomes support the extant findings that donations can improve retail sales performance while community work and the environmental-friendly activities do not necessarily improve sales growth in the retail sector but suggest that retailers can exploit more of the ones that benefit their sales revenue levels. Theoretically, the study supports the stakeholder theory’s influence on firms’ obligation to charitable cause, community investment and environmental-friendly responsibility as CSR activities that make retailers morally responsible to their customers and society in general whereas the sustainable development model was instrumental in the retailers’ CSR activities relating to environmental protection