The purpose of this paper is to assess US-based firms from 2005 to 2015 to determine whether firms with better corporate social responsibility (CSR) performance will allocate…
Abstract
Purpose
The purpose of this paper is to assess US-based firms from 2005 to 2015 to determine whether firms with better corporate social responsibility (CSR) performance will allocate capital through their life-cycle to better maintain or extend total assets.
Design/methodology/approach
Kinder, Lydenberg, Domini Research & Analytics social performance rating scores were used to measure CSR performance in an initial sample of 19,707 firm-year observations. Firms are first classified into stages including introduction, growth, maturity, and decline, and use multiclass linear discriminant analysis, the Dickinson classification scheme (Dickinson, 2011), and the ratio of retained earnings to total assets (RETA) as life-cycle proxies. Life-cycle was formulated based on a broad set of accounting data sourced from Compustat. Various corporate characteristics from the CRSP database were used to classify all sample firms into five equal groups based on their CSR performance.
Findings
A firm’s equity and debt issuance assume a hump shape over the life-cycle under CSR practice, and higher-CSR firms face fewer significant issues as they mature; payout, RETA, and free cash flow decreased from high-CSR performance firms to low-CSR performance firms; and cash holdings also exhibit a hump shape over the life-cycle and higher-CSR practices are associated with significantly lower cash holdings.
Originality/value
CSR performance is a useful predictor for forecasting firm life-cycle and superior CSR performance ensures efficient capital allocation throughout firm life-cycle. Furthermore, CSR practice is an indicator of firm life-cycle sustainability and indicates a firm’s future cash flow patterns.
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Feng Jui Hsu and Yu-Cheng Chen
The purpose of this paper is to investigate the relationships among corporate social responsibility (CSR), analyst forecast accuracy and firms’ earnings management behavior using…
Abstract
Purpose
The purpose of this paper is to investigate the relationships among corporate social responsibility (CSR), analyst forecast accuracy and firms’ earnings management behavior using US-based firms.
Design/methodology/approach
The authors use the Kinder, Lydenberg, Domini (KLD) database to construct CSR performance scores and divide all firms into ten groups from high to low as a proxy for CSR performance. The authors obtained an initial sample of 33,364 firm-year observations from 1991 to 2012. Filtering for records which exist in the KLD, Compustat, and Center for Research in Security Prices databases lefts a total of 16,807 firm-year observations and CSR evaluation reports for 5,896 firms.
Findings
The authors find that high CSR-score firms have lower rates of analyst forecast error than their low CSR-score counterparts, suggesting that CSR performance is a useful means of forecasting earnings. Furthermore, firms with better CSR performance have significantly lower accrual-based earnings management behavior. However, the level of the manipulation behavior of real earnings management (REM) activities increased significantly in better CSR firms, suggesting that high CSR-score firms substituted REM methods for accrual-based methods. REM methods are consistent with the stipulations of the Sarbanes-Oxley Act and allow high CSR-score firms to better manipulate earnings behavior. These results hold after the authors control for various factors related to firm financial characteristics.
Originality/value
Overall, the findings have important implications for investors and regulators to more easily assess firms’ earnings manipulation behavior and earnings stability under CSR performance and financial information in financial markets.
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Sheng-Hung Chen, Feng-Jui Hsu and Ying-Chen Lai
There is little known globally on the association among the independent shareholder, board size and merger and acquisition (M&A) performance. This paper addresses the global issue…
Abstract
Purpose
There is little known globally on the association among the independent shareholder, board size and merger and acquisition (M&A) performance. This paper addresses the global issue about cross-border M&A in banking sector, particularly exploring the role of difference in the independent shareholder and board size between acquirer and target banks on synergy gains based on the international study.
Design/methodology/approach
Based on cross-border bank M&As data on 59 deals from 1995 to 2009, we initially apply social network analysis techniques to explore the country connectedness of the acquirer-target banks in cross-border M&As. Ordinary least squares (OLS) with robust standard errors is further used to investigate synergy gains within the difference in the degree of bank independent shareholder and board sizes between the acquirer and target banks.
Findings
Our results indicate that the acquiring banks are generally interconnected with the targeted banks and that some of acquiring banks are clearly concentrated in Asian countries including China, Hong Kong, and Philippines. Moreover, we find that cross-border M&As with larger difference in independent shareholders between the bidder and target bank would result in higher synergy gains in all cases of takeover premiums on 1 day, 1 week and 4 weeks. In addition, financial differences between the bidder and target banks have a significant impact on synergetic gains, a topic not explored in previous studies. There is no evidence that institutional and governance differences between bidder and target bank have significant cross-border impacts on takeover premiums with respect to 1 day, 1 week and 4 weeks, respectively.
Originality/value
This paper contributes to the literature by exploring the international issue about the role of difference in the degree of bank independent shareholder and board sizes between acquirer and target banks on synergy gains. Based on bank cross-border M&As data on 59 deals from 1995 to 2009, we initially apply social network analysis to explore the country connectedness of acquirer-target bank in cross-border M&As, while ten ordinary least squares (OLS) with robust standard errors is used to investigate synergy gains within the difference in the degree of bank independent shareholder and board sizes between acquirer and target banks.
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Feng Jui Hsu and Yu-Cheng Chen
The purpose of this paper is to examine whether socially responsible firms behave differently from other firms in terms of financial risk using US-based firms from 1991 to 2012…
Abstract
Purpose
The purpose of this paper is to examine whether socially responsible firms behave differently from other firms in terms of financial risk using US-based firms from 1991 to 2012.
Design/methodology/approach
The authors used the KLD social performance rating scores as the measure of corporate social responsibility (CSR) performance and obtained an initial sample of 38,158 firm-year observations from 1991 to 2012. The authors obtained the monthly consensus earnings forecast for fiscal year one and the monthly dispersions for these earnings forecasts from I/B/E/S, and the bond spread from DataStream database. Specifically, the authors question whether firms that exhibit CSR obtain market approval to reduce financial risk, thereby providing investors and regulators with more reliable and transparent financial information, as opposed to firms that do not meet the same criteria.
Findings
The authors find that social responsible firms usually perform better in terms of their credit ratings and have lower credit risk, in terms of loan spreads when compared to corporate bond spreads, and in terms of distance to default. The results control for various measurements for CSR and time periods, consider various CSR dimensions and components, and use alternative proxies to improve the quality of financial risk estimates.
Originality/value
The findings demonstrate the importance of considering both positive and negative CSR performance. Positive CSR ratings are associated with reduced financial risk while negative CSR performance scores lead to increased financial distress. Investors respond to positive CSR ratings.
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Feng Hsu Liu, Lu Jui Chen and Hung Tai Tsou
The purpose of this paper is to investigate the effects of original equipment manufacturing suppliers’ local network embeddedness on buyers’ relative attention and joint…
Abstract
Purpose
The purpose of this paper is to investigate the effects of original equipment manufacturing suppliers’ local network embeddedness on buyers’ relative attention and joint innovation through service innovation competence.
Design/methodology/approach
A structural equation model was analyzed using AMOS 21 with data derived from 165 buyers in the Taiwanese electronics industry.
Findings
From the buyer perspective, suppliers with embedded network relationships in emerging markets are perceived to be service oriented and to have relative attention and joint innovation that are attractive to buyers. In addition, the findings of empirical testing conducted in this study suggest that perceived exploitative and explorative service innovation competence partially mediate the relationship between perceived network embeddedness and relative attention, while explorative service innovation competence partially mediates the influence of perceived network embeddedness on buyers’ joint innovation.
Originality/value
This study innovatively employed a buyer perspective to examine the servitization of manufacturing suppliers and the effects of this on the buyer–supplier relationship, providing new insights into the role of service innovation competence as well as important theoretical and managerial implications.
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Original equipment manufacturing (OEM) suppliers must identify and communicate competences to ensure that they are successfully translated into competitive advantages. This study…
Abstract
Purpose
Original equipment manufacturing (OEM) suppliers must identify and communicate competences to ensure that they are successfully translated into competitive advantages. This study aims to explore the competence-based marketing capabilities of suppliers based on competence-based marketing view. It integrates resource-based theory and resource dependence theory to conduct a detailed evaluation of the impact of competence-based marketing capabilities on collaboration development, which is classified as either exploitative or explorative collaboration between buyers and suppliers.
Design/methodology/approach
The partial least squares method was used to analyse and find direct support for the authors’ hypotheses based on cross-sectional data from a sample of 116 Taiwanese OEM suppliers.
Findings
The results find no support as recent arguments that the marketing of competence would directly affect collaborative relationships in a buyer–supplier relationship. The two mediating roles of relative attention from buyers and relationship learning with buyers were confirmed. The empirical findings indicated that relative attention from buyers partially mediates the relationship between competence-based marketing capabilities and exploitative collaboration development, while relationship learning completely mediates the relationship between competence-based marketing capabilities and two-pronged collaboration development.
Originality/value
This study provides a thorough examination of competence-based marketing capabilities, which have attracted substantial attention from business scholars but empirical research investigating and discussing how suppliers develop new collaborations with buyers is lacking.
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Hsuan-Yu Hsu, Feng-Hsu Liu, Hung-Tai Tsou and Lu-Jui Chen
Technology has been central and has made service innovations technically feasible and economically viable. Top management support, however, plays an important role in shaping a…
Abstract
Purpose
Technology has been central and has made service innovations technically feasible and economically viable. Top management support, however, plays an important role in shaping a firm’s service innovation-related strategies and decisions. This study aims to propose a theoretical framework that delineates the relationships among openness of technology adoption, top management support and service innovation within social innovation context.
Design/methodology/approach
This study obtained the data through a survey of 176 information technology (IT) firms in Taiwan; IT managers were selected as the data collection sources. A partial least squares analysis was used to address sophisticated data analysis issues.
Findings
The empirical evidence indicates that openness of technology adoption enhances service innovation within social innovation context. Furthermore, top management support facilitates the relationship between openness of technology adoption and service innovation.
Research limitations/implications
The openness of technology adoption captures the interactions among top management support in shaping service innovation. Researchers should examine the nature of open technology infrastructure that will foster such service innovation from social innovation perspective.
Practical implications
The detailed findings offer practical suggestions for firms that are compelling to invest in advanced open technologies, giving opportunities for service innovation, solving social problems and meeting the new societal challenges. Additionally, firms may foster their top management’s positive intention to support service innovation by pre-planned support activities, such as allocating sufficient new service resources and qualified support technicians.
Originality/value
This study contributes to the evolving literature on the social innovation, service-dominant logic, and contingency theory. This analysis suggests that these perspectives offer a potentially useful view for integrating insights from different literature streams (e.g. openness, social innovation, service innovation, top management support and technology management) by examining them through a different conceptual lens, thus reinforcing existing findings.
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Jui-Chuan Della Chang, Zhi-Yuan Feng, Wen-Gine Wang and Fang-Chi Tsao
Agency problems are more severe for multinational corporations (MNCs) and multinational enterprises compared to their domestic counterparts. As companies develop diversified…
Abstract
Agency problems are more severe for multinational corporations (MNCs) and multinational enterprises compared to their domestic counterparts. As companies develop diversified operations, their managers face more challenges. An incentive compensation structure has been designed to align the benefits of managers with those of shareholders. Additionally, corporate social responsibility (CSR) has become increasingly crucial for companies. MNCs must gain the trust of more investors to improve their corporate reputation and financial performance. CSR enables MNCs with a high sense of social responsibility to expand their investor base, reduce perceived risks, and decrease information asymmetry. Our empirical findings reveal that Taiwanese MNCs can enhance their performance by implementing cash-based compensation and pursuing CSR activities.
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The Communist revolution in China has led to the appearance in this country of increasing numbers of Chinese books in Russian translation. The Chinese names in Cyrillic…
Abstract
The Communist revolution in China has led to the appearance in this country of increasing numbers of Chinese books in Russian translation. The Chinese names in Cyrillic transcription have presented many librarians and students with a new problem, that of identifying the Cyrillic form of a name with the customary Wade‐Giles transcription. The average cataloguer, the first to meet the problem, has two obvious lines of action, and neither is satisfactory. He can save up the names until he has a chance to consult an expert in Chinese. Apart altogether from the delay, the expert, confronted with a few isolated names, might simply reply that he could do nothing without the Chinese characters, and it is only rarely that Soviet books supply them. Alternatively, he can transliterate the Cyrillic letters according to the system in use in his library and leave the matter there for fear of making bad worse. As long as the writers are not well known, he may feel only faintly uneasy; but the appearance of Chzhou Ėn‐lai (or Čžou En‐laj) upsets his equanimity. Obviously this must be entered under Chou; and we must have Mao Tse‐tung and not Mao Tsze‐dun, Ch'en Po‐ta and not Chėn' Bo‐da. But what happens when we have another . . . We can hardly write Ch'en unless we know how to represent the remaining elements in the name; yet we are loth to write Ch'en in one name and Chėn' in another.
Yu-Hsin Chen and Ching-Jui Keng
The purpose of this paper is to develop an extended Push-Pull-Mooring-Habit (PPMH) framework in order to better understand users’ intention of switching from offline to an online…
Abstract
Purpose
The purpose of this paper is to develop an extended Push-Pull-Mooring-Habit (PPMH) framework in order to better understand users’ intention of switching from offline to an online real-person English learning platform service.
Design/methodology/approach
Based on 301 valid responses collected from an online survey questionnaire, structural equation modeling was employed to examine the research model.
Findings
The causal model was validated using SmartPLS 3.0, and all study hypotheses were supported. The results show that push effects (learning convenience, service quality and perceived price), pull effects (e-learning motivation, perceived usefulness), mooring effects (learning engagement, switching cost and social presences) and habit effects (relationship inertia) all significantly influence users’ switching intentions from offline to an online real-person English learning platform.
Practical implications
The findings should help online English learning service providers and marketers to understand the intention of offline English learning users to switch to an online real-person English learning platform, and develop related theories, services and regulations.
Originality/value
The present study extends the prior research of an online real-person English learning platform by providing PPMH as the general framework and demonstrating its efficacy in explaining user switching intentions.