Abstract
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C.S. Agnes Cheng, Peng Guo, Cathy Zishang Liu, Jing Zhao and Sha Zhao
We examine whether the social capital of the area where a firm’s headquarters is located affects that firm’s credit rating. Given that credit rating agencies only infrequently…
Abstract
Purpose
We examine whether the social capital of the area where a firm’s headquarters is located affects that firm’s credit rating. Given that credit rating agencies only infrequently visit a firm’s headquarters, it is pertinent to investigate whether this soft information is considered.
Design/methodology/approach
In order to test whether social capital affects firms’ credit ratings, we estimate the following model using an ordinary least squares regression: Ratingit = β0 + β1 Social Capitalit + ∑ Controlsit + Industry fixed Effectsi + State−year fixed effectsit + εit. We follow recent accounting and finance research and measure societal-level social capital at the county level (Jha & Chen, 2015; Cheng et al., 2017; Hasan et al., 2017a, b; Jha, 2017; Hossain et al., 2023). We use four inputs to calculate social capital: (1) voter turnout in presidential elections, (2) the census response rate, (3) the number of social and civic associations and (4) the number of nongovernmental organizations in each county.
Findings
W provide evidence that social capital has a causal effect on credit ratings. Interesting is that this effect is not merely localized to firms near credit rating agencies. We also find that the effect of social capital on credit ratings is concentrated among firms with moderate levels of default risk. For firms with extremely low or extremely high default risk, social capital appears irrelevant to credit ratings, suggesting that social capital plays a larger role in more ambiguous contexts or when greater judgment is required. We demonstrate that the effect of social capital on credit ratings disappears when the rating agency has extensive experience in a particular region. This result is consistent with rating agencies stereotyping certain regions of the USA and using that information to inform their ratings when they have less experience in the region. Finally, we find that while social capital is associated with credit ratings, it has no association with future defaults.
Research limitations/implications
Though we cautiously followed prior studies and were confident in our data construction process, it is possible that we are measuring social capital with error.
Practical implications
Our findings suggest that credit rating agencies could benefit from reevaluating how they incorporate non-financial information, such as social capital, into their assessment processes, potentially leading to more nuanced and equitable credit ratings. Additionally, firms could use these insights to bolster their engagement with local communities and stakeholders, thereby enhancing their creditworthiness and attractiveness to investors as part of a broader corporate strategy. The findings also underline the need for regulatory frameworks that foster transparency and the inclusion of social factors in credit evaluations, which could lead to more comprehensive and fair financial reporting and rating systems.
Social implications
Recognizing that social capital can influence economic outcomes like credit ratings may encourage both communities and firms to invest more in building and maintaining social networks, trust and civic engagement. By demonstrating how social capital impacts credit ratings, our research highlights the potential to address inequalities faced by regions with lower social capital, guiding targeted social and economic development initiatives. Moreover, understanding that regional social capital can influence credit ratings might affect public perception and trust in the impartiality and accuracy of these ratings, which is essential for maintaining market stability and integrity.
Originality/value
Our research provides fresh insights into how social capital, an intangible asset, influences credit ratings – a topic not extensively explored in existing literature. This sheds light on the dynamics between social structures and financial outcomes. Methodologically, our use of the 9/11 attacks as an exogenous shock to measure changes in social capital introduces a novel approach to study similar phenomena. Additionally, our findings contrast with prior studies such as Jha and Chen (2015) and Hossain et al. (2023), by delving deeper into how proximity and familiarity impact financial assessments differently, enriching academic discourse and refining existing theories on the role of local knowledge in financial decisions.
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Zhuo (June) Cheng and Jing (Bob) Fang
This study examines the effect of stock liquidity on the magnitude of the accrual anomaly.
Abstract
Purpose
This study examines the effect of stock liquidity on the magnitude of the accrual anomaly.
Design/methodology/approach
This paper examines the relation—both time-series and cross-sectional—between stock liquidity and the magnitude of the accrual anomaly and use the 2001 minimum tick size decimalization as a quasi-experiment to establish causality.
Findings
There is both cross-sectional and time-series evidence that stock liquidity is negatively related to the magnitude of the accrual anomaly. Moreover, the extent to which investors overestimate the persistence of accruals decreases with stock liquidity. Results from a difference-in-differences analysis conducted using the 2001 minimum tick size decimalization as a quasi-experiment suggest that the effect of stock liquidity on the accrual anomaly is causal. The findings of this study are consistent with the enhancing effect of stock liquidity on pricing efficiency.
Originality/value
The study's findings are well aligned with the mispricing-based explanation for the accrual anomaly, suggesting that the improvement in market-wide stock liquidity drives the contemporaneous decline in the magnitude of the accrual anomaly, at least to a great extent.
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Zhuo (June) Cheng and Jing (Bob) Fang
This study aims to examine what underlies the estimated relation between idiosyncratic volatility and realized return.
Abstract
Purpose
This study aims to examine what underlies the estimated relation between idiosyncratic volatility and realized return.
Design/methodology/approach
Idiosyncratic volatility has a dual effect on stock pricing: it not only affects investors' expected return but also affects the efficiency of stock price in reflecting its value. Therefore, the estimated relation between idiosyncratic volatility and realized return captures its relations with both expected return and the mispricing-related component due to its dual effect on stock pricing. The sign of its relation with the mispricing-related component is indeterminate.
Findings
The estimated relation between idiosyncratic volatility and realized return decreases and switches from positive to negative as the estimation sample consists of proportionately more ex ante overvalued observations; it increases and switches from negative to positive as the estimation sample consists of proportionately more ex post overvalued observations. In sum, the relation of idiosyncratic volatility with the mispricing-related component dominates its relation with expected return in its estimated relation with realized return. Moreover, its estimated relation with realized return varies with research design choices and even switches sign due to their effects on its relation with the mispricing-related component.
Originality/value
The novelty of the study is evident in the implication of its findings that one cannot infer the sign of the relation of idiosyncratic volatility with expected return from its estimated relation with realized return.
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Virginia Fani, Ilaria Bucci, Monica Rossi and Romeo Bandinelli
Examining synergies between Lean, Industry 4.0, and Industry 5.0 principles, the aim is to showcase how Lean's focus on people enhances Industry 5.0 implementations, leading to…
Abstract
Purpose
Examining synergies between Lean, Industry 4.0, and Industry 5.0 principles, the aim is to showcase how Lean's focus on people enhances Industry 5.0 implementations, leading to the development of the Lean 5.0 paradigm. In addition, insights from artisanal industries, like the fashion one, are specifically collected.
Design/methodology/approach
First, a literature review was conducted to define a comprehensive framework to understand how Lean fits into the Human-Centric (HC) paradigm of Industry 5.0. Second, a case study was employed to give empirical insights and identify practical initiatives that brands can pursue, involving two best-in-class leather goods brands located in Italy.
Findings
A conceptual framework to pave the way for new paradigm Lean 5.0 was defined and validated through a case study. To path the way for a case study in the fashion industry, the Lean HC paradigm is detailed into domains and related categories to group practices. The empirical insights demonstrate that Lean HC actions can be effectively supported by Industry 4.0 technologies in traditional sectors like the fashion industry, shifting towards Industry 5.0.
Practical implications
The proposed framework and related practices can be used by companies to facilitate their transition towards Industry 5.0, leveraging on Lean Manufacturing.
Originality/value
The innovative contribution of the present work mainly refers to the proposed conceptual framework, encompassing Lean, HC and Industry 4.0 and introducing Lean 5.0 paradigm. The case study enriches the empirical contributions in the fashion industry.
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Anna Karin Olsson, Kristina M. Eriksson and Linnéa Carlsson
The purpose is to apply the co-workership approach to contribute guidelines for manufacturing managers to exploit the potential of digital technologies through a human-centric…
Abstract
Purpose
The purpose is to apply the co-workership approach to contribute guidelines for manufacturing managers to exploit the potential of digital technologies through a human-centric perspective.
Design/methodology/approach
A longitudinal single case study within manufacturing including a mix of qualitative methods with 18 in-depth interviews and focus groups with 25 participants covering all organizational levels and functions.
Findings
Findings demonstrate that to re-interpret manufacturing management through the lens of Industry 5.0 (I5.0), managers need to respond to the call for a more human-centric perspective by focusing on organizational prerequisites, such as holistic understanding, inclusive organizational change, leadership practices, learning and innovation processes.
Research limitations/implications
Limitations due to a single case study are compensated with rich data collected over time with the strengths of mixed methods through in-depth interviews and focus groups with participants reflecting and developing ideas jointly.
Practical implications
Managers’ awareness of organizational prerequisites to promote human perspectives in all functions and at all levels in digital transformation is pivotal. Thus, proposed organizational prerequisites are presented as managers’ guidelines for future innovative manufacturing.
Social implications
Findings emphasize the need for digital transformation managers to apply a human-centric perspective acknowledging how organizational changes affect the inclusion of employees, and thus challenge culture, structure, communication and trust toward I5.0.
Originality/value
The study contributes to the emerging field of I5.0 by applying an interdisciplinary approach to understand the elusive phenomena of enfolding technology and humans.
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This paper summarizes the severity of global warming, collaboration and endeavor within international government and the trend of international development for “energy-saving and…
Abstract
This paper summarizes the severity of global warming, collaboration and endeavor within international government and the trend of international development for “energy-saving and emission reduction.” The Chinese government is enduring high pressure under the environment of “global warming” and “energy-saving and emission reduction” and it has made a policy for “energy-saving and emission reduction.” Based on this, we analyzed the possibility and feasibility for our logistics to “energy-saving and emission reduction,” then propose some solutions for our logistics industry to development and “energy-saving and emission reduction.”
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Arathai Din Eak and Nagaletchimee Annamalai
This systematic literature review paper critically examines the effectiveness of screencast feedback compared with text feedback in promoting student learning outcomes in online…
Abstract
Purpose
This systematic literature review paper critically examines the effectiveness of screencast feedback compared with text feedback in promoting student learning outcomes in online higher education. This paper aims to contribute to the ongoing discussion surrounding feedback modalities and their impact on online learning environments.
Design/methodology/approach
This paper adopts a systematic review approach to synthesise and analyse existing studies investigating the use of screencast feedback in online higher education settings. A comprehensive search and selection process was employed to identify relevant literature. The selected studies were then analysed for their methodologies, findings and implications. This paper seeks to provide an overview of the current state of research, highlighting the benefits, challenges and potential impacts of screencast feedback on student learning outcomes.
Findings
The findings of this paper suggest that while there is a positive perception of screencast feedback among students and instructors, drawing definitive conclusions about its superiority over text feedback remains at the very beginning. Students generally appreciate the personalised, supportive and engaging nature of screencast feedback, particularly within the online learning context. However, challenges such as technical barriers and potential workload implications for instructors are also noted. Further empirical research is needed to comprehensively evaluate the comparative efficacy of screencast feedback, considering factors like online engagement, digital literacy and the impact on diverse student populations.
Research limitations/implications
This review underscores the acute necessity for expansive and meticulously designed studies that can provide conclusive insights into the authentic potential of screencast feedback and its resonance within the unique landscape of online learning. Through rigorous inquiry, educators can discern the optimal strategies for harnessing the advantages of screencast feedback to enhance student learning outcomes, aligning harmoniously with the dynamics of virtual classrooms.
Practical implications
Screencast feedback emerges as a promising avenue to foster meaningful connections between instructors and learners. The review highlights that screencast feedback engenders a more dialogic interaction between lecturers and students, resulting in personalised, supportive and engaging feedback experiences.
Social implications
The systematic review conducted underscores the positive reception of screencast feedback from both students and lecturers in this context. The findings are consistent with the principles of social constructivist theory, suggesting that the interactive and personalised nature of screencast feedback facilitates a richer educational experience for students, even within the confines of virtual classrooms (Vygotsky, 1978).
Originality/value
This innovative blend of methodologies contributes new insights that can inform educational practices and pedagogical strategies in online learning environments.