Frederick Davis, Behzad Taghipour and Thomas J. Walker
The purpose of this paper is to investigate the trading patterns of corporate insiders, both managing and non-managing, around the announcement dates of securities class action…
Abstract
Purpose
The purpose of this paper is to investigate the trading patterns of corporate insiders, both managing and non-managing, around the announcement dates of securities class action lawsuits and related legal settlements.
Design/methodology/approach
The authors use market model event study methodology to examine the impact of class action litigation and settlement announcements on the stock prices of sued firms. The authors then determine the extent of abnormal insider trading surrounding such announcements by comparing insider trading activity (volume and transaction counts) to prior insider trading in the same firm, and to a matched sample of firms not experiencing such litigation announcements. A multivariate framework is utilized to provide further insight into the determinants of such abnormal insider trading.
Findings
The authors establish that class action litigation and settlement announcements have a significant impact on the stock prices of sued firms, and that foreknowledge of these events appears to be used by insiders to earn abnormal profits. Moreover, results indicate that managing insiders exhibit higher opportunistic abnormal trading activity than non-managing insiders. Multivariate analysis shows that size, prior firm returns, and the implementation of the Sarbanes-Oxley Act are important determinants of such insider trading.
Originality/value
This appears to be the first paper to analyze insider trading surrounding class action settlement announcements, and raises concerns about the ethical conduct of certain insider groups while highlighting the importance of access to private information, even amongst insiders themselves.
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Hamed Khadivar, Frederick Davis and Thomas Walker
In this paper, the authors examine options trading in firms that soon become rumored takeover targets. This study also examines whether measures of informed trading can predict…
Abstract
Purpose
In this paper, the authors examine options trading in firms that soon become rumored takeover targets. This study also examines whether measures of informed trading can predict target returns (upon rumor announcement and over the post-rumor period) and/or predict which rumors lead to bids. The authors further assess whether the informed trading they observe is more prevalent in the options market or the equity market.
Design/methodology/approach
This study calculates abnormal options volume using a market-model approach that accounts for different attributes of options trading. The authors construct a control sample and compare equity options trading of firms in their sample with that of the control sample. In addition, the authors fit a series of regressions to examine whether pre-rumor abnormal options trading can predict rumor accuracy in a multivariate setting.
Findings
The authors find that the volume of options traded is abnormally high over the pre-rumor period while the direction of option trades (abnormal call volume minus abnormal put volume) prior to takeover rumors predicts forthcoming takeover announcements, rumor date target firm returns and post-rumor target firm returns. The results are robust when controlling for publicly available information, when using a control sample, and when using alternative measures of informed trading.
Originality/value
This study is the first to provide evidence of informed options trading prior to a broad sample of takeover rumors. In addition, this study contributes to the literature on takeover predictability and profitability by showing that various pre-rumor measures of informed options trading significantly predict bid announcements. The authors also contributes to the literature on price discovery by providing evidence that informed investors are more likely to trade in the options market than in the equity market during the pre-event period.
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Frederick Davis, Thomas Walker and Linyi Zhou
Within the context of mergers and acquisitions, the purpose of this paper is to clarify the relationship between the deal initiator and various outcomes of the deal, particularly…
Abstract
Purpose
Within the context of mergers and acquisitions, the purpose of this paper is to clarify the relationship between the deal initiator and various outcomes of the deal, particularly in consideration of the cash position of the acquiring firm.
Design/methodology/approach
Using hand-collected deal initiation data from various filings on the Securities Exchange Commission EDGAR online database, this paper performs a series of event study analyses, multivariate analyses, a Heckman two-step estimation procedure, and an instrumental variable approach to examine merger outcomes.
Findings
This paper finds that many merger and acquisition (M&A) outcomes (target and acquirer announcement returns, acquirer long-run returns, premiums, and the method of payment) are significantly related to deal initiation, particularly in consideration of the cash position of the acquiring firm. Overall, evidence is seen as consistent with the theory that “lemons” selectively approach cash-rich acquirers, often to the acquirers’ detriment.
Originality/value
This paper finds that target-initiated deals are not necessarily associated with poorer transaction outcomes for targets as contemporaneous studies suggest, and presents the first empirical evidence of M&A outcomes related to the deal initiator which are dependent on the cash position of the acquiring firm.
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Purpose: This chapter will look closely at CSR in its first section. The necessity of striking a balance between company aims and CSR goals will be covered next. The significance…
Abstract
Purpose: This chapter will look closely at CSR in its first section. The necessity of striking a balance between company aims and CSR goals will be covered next. The significance of CSR in the travel and tourism industry will also be discussed. Lastly, a thorough discussion of how CSR may be used as a tactical move to guarantee sustainability and market competitiveness will round off the chapter.
Methodology/study design/approach: This chapter benefits from the wide range of secondary data sources that are cited as well as the inclusion of important industry reports and assessments.
Findings: Incorporating CSR into the tourism industry is not just a moral duty but also a critical strategic move toward attaining sustainability and maximizing corporate effectiveness. In light of the ever-changing global landscape that is marked by social inequality, environmental concerns, and issues related to cultural preservation, the future course that tourism-related businesses will follow is increasingly being determined by CSR.
Originality/value: The paradigm presented in this chapter offers a fresh and systematic perspective on CSR as a strategic instrument for attaining sustainability in the travel and tourist industry.
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J. Luke Wood and John D. Harrison
This paper focuses on the Obama administration’s American Graduation Initiative (AGI) and the associated completion agenda.
Abstract
Purpose
This paper focuses on the Obama administration’s American Graduation Initiative (AGI) and the associated completion agenda.
Design/methodology/approach
In this paper, we provide an in-depth overview of the AGI with a focus on: (a) articulating the rationale that prompted the AGI; (b) describing the four primary components of the reform effort; (c) examining the political forces that led to its demise; (d) investigating the derivatives of the AGI in the form of private foundation and state-level efforts to bolster success rates; and (e) illuminating criticisms of the AGI that could have served to complicate the initiative’s success.
Originality/value
In the latter section of the paper, we also offer recommendations for future national and state policy.
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Rajya Lakshmi Kandukuri, Laila Memdani and P. Raja Babu
The importance of corporate governance was recognized aftermath the major corporate scandal and regulators all over the world tightened regulations. When Sarbanes-Oxley Act was…
Abstract
The importance of corporate governance was recognized aftermath the major corporate scandal and regulators all over the world tightened regulations. When Sarbanes-Oxley Act was passed, President of United States George W. Bush proclaimed that “the era of low standards and false profits are over.” Following the path, SEBI (Securities and Exchange Board of India) introduced clause 49 to the listing agreement to enhance transparency and integrity to financial statements. Adequate disclosures thus ensure good governance. The concept of corporate governance is more than a decade old in India. Following Satyam Scandal, Indian Industry groups and regulators advocated a number of reforms which led to MCAs (Ministry of Company Affairs) Corporate Governance Voluntary guidelines 2009 to encourage and guide companies to adopt superior practices like appointing board committees, the appointment and rotation of external auditors, and creating a whistle blowing mechanism. The new Companies Amendment bill made the corporate governance disclosures even more stringent. Hence this is an attempt on our part to construct an objective overall corporate governance score to reflect the whole firm governance practices as per the disclosure requirements of clause 49 of the listing agreement of SEBI as well as the insights from the various academic studies to score each element of corporate governance and study the impact of governance on corporate performance represented by Tobin Q.
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W. Randy Evans, Stephanie S. Pane Haden, Russell W. Clayton and Milorad M. Novicevic
The aim of this paper is to examine the development of the social responsibility (SR) of business concept and related management philosophies through the…
Abstract
Purpose
The aim of this paper is to examine the development of the social responsibility (SR) of business concept and related management philosophies through the history‐of‐management‐thought perspective.
Design/methodology/approach
The history‐of‐management‐thought approach to social responsibility (SR) is grounded in the paradigm of continuing progress exemplified by the contributions of great management thinkers (e.g. Fayol, Taylor, Follett, Barnard). A historical evolution of the SR concept is provided, together with tracing the development of stakeholder theory in its attempt to depict the relationship between stakeholder management and SR.
Findings
Three management philosophies (recognition of the external environment, a need for collaboration, and a need for a shared understanding) emerge from both classical and modern management thinkers. Recent conceptualizations have added depth by clarifying the meaning of social responsibility and in addition, detailing the nature of firm‐stakeholder relationships. Despite voluminous literature, achieving collaborative integration between firms and stakeholders in practice appears elusive.
Practical implications
These management philosophies can help organizations navigate the intertwined relationship between business and society. Business leaders need to consider the vital role of trust in building more collaborative relationships.
Originality/value
The unique contribution of this paper is to provide the first history‐of‐management‐thought perspective on the social responsibility of business by tracing changes in the conceptualization of this concept, including the related stakeholder paradigm, to their roots in the works of renowned management thinkers.
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Institutions have the capacity to constrain and regulate behavior. Social problems and their remedies are not exempt from this reality. Consequently, actors attempting to…
Abstract
Institutions have the capacity to constrain and regulate behavior. Social problems and their remedies are not exempt from this reality. Consequently, actors attempting to ameliorate pressing problems must do so within the existing frameworks of acceptable and unacceptable paths toward justice. The current study combines the institutional theory and social movement literatures to highlight how this dilemma affects the resource mobilization process. Elites control resources critical to solving social problems. Yet, they often benefit from the very institutional arrangements that have led to a social problem’s emergence. This contradiction then requires those seeking to alleviate social problems to construct a narrative that will simultaneously entice elites to give without challenging elites’ institutional position. The paper empirically investigates the National Association for the Advancement of Colored People (NAACP) and the United Negro College Fund’s (UNCF) efforts to gain support from the Rockefeller family and its foundations between 1928 and 1954. A comparative historical analysis of correspondence records identifies the critical differences that led to the UNCF receiving millions in support from Rockefeller interests while the NAACP was routinely denied funding.
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Frederick Ahen and Peter Zettinig
Purpose – This chapter seeks to theoretically demonstrate that authentic corporate strategy is entrenched in an ethical responsibility, and ethical responsibility requires a…
Abstract
Purpose – This chapter seeks to theoretically demonstrate that authentic corporate strategy is entrenched in an ethical responsibility, and ethical responsibility requires a strategic framework to qualify as a sustainable value co-creation process that determines the long-term success of the firm.Design/methodology/approach – Through economic philosophical analysis and content analysis, we critically reviewed literature which argues for the integration of corporate responsibility (CR) and corporate strategy both in theory and practice by putting the concept into a proper context of institutional and time-based dynamics.Findings – The chapter delineates the salient dimensions of the dominant logic (D-L) of strategic corporate responsibility (SCR). The traditional notion of CSR is explained, compared and contrasted with the transitioning process of strategic CSR and the D-L of SCR which is at the civic level. We also identified four global forces that serve as enablers of strategic CR logic.Practical implications – The D-L of SCR explains how a firm defines and redefines itself and not what a firm does. We underscore what firms are in the ‘process of becoming’ through a co-evolutionary process with markets and institutions. Firms which want to go beyond mere survival in the 21st century must see the D-L of SCR not as a choice but as an imperative constrained by these global forces.Originality/value of chapter – The novelty of this chapter is that it challenges traditional CSR and provides a shift in thinking about the concept of CR where sustainability and innovative strategies become the source of institutional and market legitimacy and hence a competitive advantage.
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The purpose of this paper is to understand the evolutionary influences on corporate social responsibility (CSR) literature at a global level and propose the future studies…
Abstract
Purpose
The purpose of this paper is to understand the evolutionary influences on corporate social responsibility (CSR) literature at a global level and propose the future studies required to enhance the CSR literature.
Design/methodology/approach
This paper combines the methodologies of narrative review and historical analysis. Drawing on the archival information, this paper synthesises data from multiple sources to bring out an enhanced understanding of the external influences on the development of CSR literature.
Findings
The findings suggest that the CSR literature in the previous decades has been influenced by several management domains like strategic management, marketing management and organisational behaviour. The future research is likely to be more influenced by the perspectives of national business system, politico-legal context and practical considerations related to implementation.
Practical implications
This review paper presents a case for studying the practical aspects of CSR implementation and the changing nature of the external context of CSR.
Originality/value
The paper offers unique value by combining different review methodologies and abstraction at a global level. This paper is a significant addition to better understand the impact of business events on the progress of CSR and the external influence on CSR literature.