State pension funds and corporate social responsibility: do beneficiaries’ political values influence funds’ investment decisions?

This study explores the underlying drivers of US public pension funds’ tendency to tilt their portfolios towards companies with stronger corporate social responsibility (CSR). Studying the equity holdings of large, internally-managed US state pension funds, we find evidence that the political leaning of their beneficiaries and political pressures by state politicians affect funds’ investment decisions. State pension funds from states with Democratic-leaning beneficiaries tilt their portfolios more strongly towards companies that perform well on CSR issues, and this tendency is intensified when the state government is dominated by Democratic state politicians. Moreover, we find that funds which tilt their portfolios towards companies with superior CSR scores generate a slightly higher return compared with their counterparts. Overall, our findings indicate that funds align their investment choices with the financial and non-financial interests of their beneficiaries when deciding whether to incorporate CSR into their equity allocations

International New Ventures: Revisiting the Influences Behind the 'Born-Global' Firm

There is a small but theoretically important literature on ‘born-globals’ or international new venture firms that positions itself in contrast to the more established sequential international entry literature. In this paper we examine the pattern of entry into international markets for a set of international new ventures and show that they need not be a distinct breed of firms, as previous research has portrayed. Absent a specific technological advantage, the decision for a new venture to internationalize at inception is influenced by the size of its home market and by its production capacity, as well as by cultural and economic forces that also influence other more traditional firms that stage their entry into international markets. Most importantly, we demonstrate that the decision to internationalize or not should be considered jointly with the capacity allocation decision to specific international markets, as analysing these separately may lead to biased results. Journal of International Business Studies (2007) 38, 1113–1131. doi:10.1057/palgrave.jibs.8400308

Stock characteristics and herding in financial analyst recommendations

Most studies investigating the herding of financial analysts focused on the impact of analyst attributes on herding, while firm characteristics may also contribute significantly to herding. The primary objective of this study is to examine whether analyst recommendations prefer stocks with firm characteristics associated with future returns and demonstrate the so-called 'characteristic herding' behaviour. Thus, in this study, we incorporate within Welch's (2000) model those characteristics of firms relating to future returns; as a result, we find that 'characteristic herding' is discernible in the recommendations of financial analysts. This tendency towards herding in analyst recommendations increases with the firm size and book-to-price ratio of the stock. One of these two firm characteristics positively correlates with the future returns of stocks while the other displays a negative correlation. Consequently, the 'characteristic herding' of analysts is caused in part by recommendations made on account of stock fundamentals and in part by other reasons. This may dampen the impact of future returns on herding. It has also been observed that herding exists in the market regardless of bull market or bear market. No significant inferiority is reported in analyst performance with herding when compared to the performance without herding.