110 research outputs found
Do Foreigners Invest Less in Poorly Governed Firms?
As domestic sources of outside finance are limited in many countries around the world, it is important to understand the factors that influence whether foreign outside investors provide capital to a country's firms. This study examines whether and why investor concern about corporate governance results in fewer foreign holdings. We use a comprehensive set of foreign holdings by U.S. investors as a proxy for foreign investment and analyze a sample of 4,411 firms from 29 emerging market and developed economies. We find that foreigners invest significantly less in firms that are poorly governed, i.e., firms that have ownership structures that are more conducive to outside investor expropriation. Interestingly, this finding is not simply a matter of a country's economic development but appears to be directly related to a country's information rules and legal institutions. We therefore argue that information problems faced by foreign investors play an important role in this result. Supporting this explanation, we show that foreign investment is lower in firms that appear to engage in more earnings management.
Social capital, trust, and firm performance: the value of corporate social responsibility during the financial crisis
During the 2008-2009 financial crisis, firms with high social capital, measured as corporate social responsibility (CSR) intensity, had stock returns that were four to seven percentage points higher than firms with low social capital. High-CSR firms also experienced higher profitability, growth, and sales per employee relative to low-CSR firms, and they raised more debt. This evidence suggests that the trust between the firm and both its stakeholders and investors, built through investments in social capital, pays off when the overall level of trust in corporations and markets suffers a negative shock
Trust, social capital, and the bond market benefits of ESG performance
We investigate whether a firmās social capital and the trust that it engenders are viewed favorably by bondholders. Using firmsā environmental and social (E&S) performance to proxy for social capital, we find no relation between social capital and bond spreads over the period 2006ā2019. However, during the 2008ā2009 financial crisis, which represents a shock to trust and default risk, high-social-capital firms benefited from lower bond spreads. These effects are stronger for firms with higher expected agency costs of debt and firms whose E&S efforts are more salient. During the crisis, high-social-capital firms were also able to raise more debt, at lower spreads, and for longer maturities. We find no evidence that the governance element of ESG is related to bond spreads. The gap between E&S performance of firms in the bottom and top E&S terciles has narrowed since the financial crisis, especially in the year prior to accessing the bond market
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Does family control matter? International evidence from the 2008-2009 financial crisis
We study whether and how family control affects valuation and corporate decisions during the 2008ā2009 financial crisis using a sample of more than 8,500 firms from 35 countries. We find that family-controlled firms underperform significantly, they cut investment more relative to other firms, and these investment cuts are associated with greater underperformance. Further, we find that within family groups liquidity shocks are passed on through investment cuts across the group. Our evidence is consistent with families taking actions to increase the likelihood that the firms under their control and their control benefits survive the crisis, at the expense of outside shareholders
To which world regions does the valenceādominance model of social perception apply?
Over the past 10 years, Oosterhof and Todorovās valenceādominance model has emerged as the most prominent account of
how people evaluate faces on social dimensions. In this model, two dimensions (valence and dominance) underpin social
judgements of faces. Because this model has primarily been developed and tested in Western regions, it is unclear whether
these findings apply to other regions. We addressed this question by replicating Oosterhof and Todorovās methodology across
11 world regions, 41 countries and 11,570 participants. When we used Oosterhof and Todorovās original analysis strategy,
the valenceādominance model generalized across regions. When we used an alternative methodology to allow for correlated
dimensions, we observed much less generalization. Collectively, these results suggest that, while the valenceādominance
model generalizes very well across regions when dimensions are forced to be orthogonal, regional differences are revealed
when we use different extraction methods and correlate and rotate the dimension reduction solution.C.L. was supported by the Vienna Science and Technology Fund (WWTF VRG13-007);
L.M.D. was supported by ERC 647910 (KINSHIP); D.I.B. and N.I. received funding from
CONICET, Argentina; L.K., F.K. and Ć. Putz were supported by the European Social
Fund (EFOP-3.6.1.-16-2016-00004; āComprehensive Development for Implementing
Smart Specialization Strategies at the University of PĆ©csā). K.U. and E. Vergauwe were
supported by a grant from the Swiss National Science Foundation (PZ00P1_154911 to E.
Vergauwe). T.G. is supported by the Social Sciences and Humanities Research Council
of Canada (SSHRC). M.A.V. was supported by grants 2016-T1/SOC-1395 (Comunidad
de Madrid) and PSI2017-85159-P (AEI/FEDER UE). K.B. was supported by a grant
from the National Science Centre, Poland (number 2015/19/D/HS6/00641). J. Bonick
and J.W.L. were supported by the Joep Lange Institute. G.B. was supported by the Slovak
Research and Development Agency (APVV-17-0418). H.I.J. and E.S. were supported
by a French National Research Agency āInvestissements dāAvenirā programme grant
(ANR-15-IDEX-02). T.D.G. was supported by an Australian Government Research
Training Program Scholarship. The Raipur Group is thankful to: (1) the University
Grants Commission, New Delhi, India for the research grants received through its
SAP-DRS (Phase-III) scheme sanctioned to the School of Studies in Life Science;
and (2) the Center for Translational Chronobiology at the School of Studies in Life
Science, PRSU, Raipur, India for providing logistical support. K. Ask was supported by
a small grant from the Department of Psychology, University of Gothenburg. Y.Q. was
supported by grants from the Beijing Natural Science Foundation (5184035) and CAS
Key Laboratory of Behavioral Science, Institute of Psychology. N.A.C. was supported
by the National Science Foundation Graduate Research Fellowship (R010138018). We
acknowledge the following research assistants: J. Muriithi and J. Ngugi (United States
International University Africa); E. Adamo, D. Cafaro, V. Ciambrone, F. Dolce and E.
Tolomeo (Magna GrƦcia University of Catanzaro); E. De Stefano (University of Padova);
S. A. Escobar Abadia (University of Lincoln); L. E. Grimstad (Norwegian School of
Economics (NHH)); L. C. Zamora (Franklin and Marshall College); R. E. Liang and R.
C. Lo (Universiti Tunku Abdul Rahman); A. Short and L. Allen (Massey University, New
Zealand), A. AteÅ, E. GĆ¼neÅ and S. Can Ćzdemir (BoÄaziƧi University); I. Pedersen and T.
Roos (Ć
bo Akademi University); N. Paetz (Escuela de ComunicaciĆ³n MĆ³nica Herrera);
J. Green (University of Gothenburg); M. Krainz (University of Vienna, Austria); and B.
Todorova (University of Vienna, Austria). The funders had no role in study design, data
collection and analysis, decision to publish or preparation of the manuscript.https://www.nature.com/nathumbehav/am2023BiochemistryGeneticsMicrobiology and Plant Patholog
International Evidence on Cash Holdings and Expected Managerial Agency Problems
This article uses managerial control rights data for over 5000 firms from 31 countries to examine the net costs and benefits of cash holdings. We find that when external country-level shareholder protection is weak, firm values are lower when controlling managers hold more cash. Further, when external shareholder protection is weak we find that firm values are higher when controlling managers pay dividends. Only when external shareholder protection is strong do we find that cash held by controlling managers is unrelated to firm value, consistent with generally prevailing U.S. and international evidence. , Oxford University Press.
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