Jimi Park, Shijin Yoo and Minyoung Noh
The purpose of this paper is to develop a more comprehensive understanding of the consequences of retaliations and our evidence indicates that retaliations are beneficial for…
Abstract
Purpose
The purpose of this paper is to develop a more comprehensive understanding of the consequences of retaliations and our evidence indicates that retaliations are beneficial for firms with supranormal earnings by making their higher earnings more persistent, but harmful for firms with subnormal earnings by slowing the recovery of their earnings.
Design/methodology/approach
This paper use annual Compustat files based on Fama-French 48 industry. The time-varying competitive reactions (CRs) for each firm are captured using quarterly rolling-window estimation across 41 windows with five years (i.e. 20 observations) in each window. This paper measure earnings persistence as the slope coefficient (ß1) from regressing future earnings on current earnings. The result remains qualitatively similar to the main findings when alternative measures of earnings persistence.
Findings
Abnormal earnings are expected to dissipate in the long run owing to competitive forces, but this paper show that more retaliatory CRs increase earnings persistence. This is good news for supranormal firms as they can sustain high profitability. However, it will be harder to revert subnormal earnings to the industry mean if such firms conduct more retaliatory CRs. This paper also show that these associations are stronger for less competitive industries.
Research limitations/implications
First, high earnings persistence per se would not be a major consideration in the firm’s strategic decisions but a natural by-product of such decisions spanning an extended period of operations. Second, though this paper focus on the period of 2004–2018 that includes the rebound after financial crisis in 2008, an extension of the observation period over a longer economic cycle would verify our results.
Practical implications
CRs are regarded as an evolving portfolio of dynamic marketing decisions and tools for strategic decisions in our study. It helps how firms manage competition over time to lengthen the superior performance. Also it helps the low-profitability firms attempting to improve profitability by showing nonretaliation may be a more appropriate strategy than retaliation.
Social implications
Firms in financial distress suffer from illiquidity, survival of firms is contingent on meeting their financial obligations, thus need for turnaround decisions. However, retaliations under financial distress can mitigate the effect of such turnaround decisions and thereby aggravate the situation.
Originality/value
Greater persistence extends the benefits of superior earnings, thus increasing the opportunities for value exploitation, but it may also restrict earnings recovery. This paper finds that the way that firms react within the competition explain the differences in earnings persistence. Although a large body of research has examined the static drivers (e.g. firm size and diversification) of the differential persistence of earnings, there has been little research on dynamic drivers that explicitly recognize the erosion process for earnings.
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This study aims to examine how a firm’s strategic emphasis on value appropriation over value creation is associated with the readability of narrative disclosures in annual reports.
Abstract
Purpose
This study aims to examine how a firm’s strategic emphasis on value appropriation over value creation is associated with the readability of narrative disclosures in annual reports.
Design/methodology/approach
This study examines the effect of the strategic emphasis on annual report readability based on a total of 45,273 US firm-year (5,754 unique firms) observations for the period from 1994 to 2018. Strategic emphasis is measured as advertising expenses minus research and development expenses, scaled by sales and Bog index and various measures, such as the FOG, KINCAID and FLESCH index, are used to measure the annual report readability.
Findings
The authors find that the strategic emphasis on value appropriation over value creation is positively related to firms’ annual report readability. In addition, the positive effect of the strategic emphasis on value appropriation over value creation on annual report readability is more pronounced with high managerial ability.
Practical implications
With the continual effort of Securities and Exchange Commission regulation and IFRS updates to improve narrative disclosures, it is meaningful to provide evidence showing how managers shape narratives in annual reports by highlighting good news with easy-to-understand words, but also may establish a barrier to understanding by choosing to use long and complex words depending on their strategic emphasis.
Originality/value
The evidence suggests that a strategic emphasis between value appropriation and value creation and managerial ability is an important factor in shaping the readability of annual reports, which contributes to the management, accounting and finance literature that investigates the relationship between resource deployment (i.e. strategic emphasis) and textual properties of corporate financial disclosures (i.e. readability).
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Minyoung Noh, Jimi Park and Shijin Yoo
The authors examine how a firm's strategic emphasis (SE) on value appropriation (VA) over value creation (VC) is associated with accounting conservatism.
Abstract
Purpose
The authors examine how a firm's strategic emphasis (SE) on value appropriation (VA) over value creation (VC) is associated with accounting conservatism.
Design/methodology/approach
To examine the effect of SE on a firm's adoption of conservative accounting practice, the authors measure SE as advertising expenses minus research and development (R&D) expenses scaled by total assets. The authors rely on the asymmetric timeliness of earnings from Basu (1997) to measure conditional conservatism and investigate how the incremental sensitivity of earnings to negative stock returns varies with the SE.
Findings
SE on VA over VC is found to be positively related to accounting conservatism since they want to deter entrants (i.e. competition adjustment) and to accommodate the tighter monitoring over the financial reporting system from stakeholders (i.e. risk adjustment). This argument is also supported by the additional cross-sectional tests based on the different level of market competition and external monitoring environment. In addition, the positive association between SE on VA over VC and accounting conservatism is less pronounced when managerial overconfidence is high.
Research limitations/implications
Implication is that two important decisions (i.e. SE and accounting conservatism) are related with each other since both are to create competitive advantage and to maintain financial stability for a firm, and the relation differs by managerial characteristics.
Originality/value
This study highlights the differential roles of SE in shaping the conservatism in financial reporting and the importance of overconfidence in driving conservative accounting.
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Jimi Park and Shijin Yoo
The purpose of this paper is to answer why the predominant competitive reaction (CR) is non-reactive one in the previous literature by showing that some fluctuations of CR may…
Abstract
Purpose
The purpose of this paper is to answer why the predominant competitive reaction (CR) is non-reactive one in the previous literature by showing that some fluctuations of CR may average out to zero.
Design/methodology/approach
This research proposes a model for measuring CR volatility to examine whether a firm’s CR differs over time. A rolling-windows time series approach is applied to three different data sets.
Findings
The results show that firms indeed react to each other, but the types of reactions vary over time, thereby creating a misunderstood “no-reaction” in the literature.
Practical implications
This study may help understand the gap between academic findings (i.e. no-reaction) and managerial reality (i.e. marketing wars).
Originality/value
Although a firm’s CR should be understood as a series of managerial actions that may change over time, the extant literature has not considered this temporal variation of CR. This paper provides a systematic review of the empirically based literature and provides insights into the importance of strategic variation in competitive dynamics.
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Arif Kamisan Pusiran, Yuzainy Janin, Sarimah Ismail and Lorna Jimi Dalinting
The purpose of this paper is to provide some insights on current industry internship practices and the perceptions of students during their internship experience. This paper also…
Abstract
Purpose
The purpose of this paper is to provide some insights on current industry internship practices and the perceptions of students during their internship experience. This paper also highlights some issues pertaining to internship from the students’ and the industry’s perspective
Design/methodology/approach
The paper utilises qualitative research methodology using in-depth interviews.
Findings
The sources of conflict arising between the two parties need to be addressed carefully so as to create a win–win situation. The paper offers some suggestions for higher education institutions as to how to establish better guidelines for student internships as well as for industry operators..
Originality/value
Internship, industrial training, practical training or work-integrated learning refers to the involvement of students, institutions and colleges of higher learning in the industry. Internship provides an opportunity for students to experience first-hand, a work-related learning process. Given this, the involvement of industry in accepting students onto well-designed internship programmes is very much needed, so as to ensure the completion of a balanced period of study for a career in hospitality and tourism.
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Blagden Packaging unveiled at this year's Pakex Exhibition a new concept in “bag‐in‐the‐box” Intermediate Bulk Container. The multi‐national project between LB Systemer SA…
Abstract
Blagden Packaging unveiled at this year's Pakex Exhibition a new concept in “bag‐in‐the‐box” Intermediate Bulk Container. The multi‐national project between LB Systemer SA Copenhagen, Dow Corning and Blagden Packaging is the result of over two years research and development.
The apparent contemporary corporate model is that of a “responsible firm” – a firm that pursues not only profit and shareholder return but also considers the concerns and…
Abstract
The apparent contemporary corporate model is that of a “responsible firm” – a firm that pursues not only profit and shareholder return but also considers the concerns and interests of its social and environmental stakeholders. Research on corporate social responsibility (CSR), investor recognition via environmental, social, and governance (ESG) issues, and long-term sustainability has developed into an established field of study. We attempt to clarify the terminologies and models of this field by conducting a brief review of the existing work and suggesting an integrated conceptual framework for CSR, ESG, and sustainability in a domestic and global context. We suggest that externality and temporality are the drivers of this integrated framework.
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The author launched an online survey at a private English-speaking university in Kuwait to evaluate the status, value and importance of Japanese and Korean popular cultures in…
Abstract
The author launched an online survey at a private English-speaking university in Kuwait to evaluate the status, value and importance of Japanese and Korean popular cultures in Kuwait. East-Asian culture is a subculture that is very widespread in the region because of Internet use and the influence of English-speaking education. The survey shows that this subculture can be understood as an alternative culture because it tends to contain a dissimulated critique of traditional Kuwaiti culture. Many students approach Japanese and Korean cultural products because they are in search of a coherent lifestyle founded on certain ethics. The Japanese–Kuwaiti cultural transfer implies a double resistance towards the local culture and towards American culture. The resulting marginalization is therefore two-fold. Resistance towards Western culture is here not based, as is often assumed in Arab contexts, on cultural closure and conservatism, but rather on the willingness to engage with an alien culture. This creates a paradoxical pattern of resistance to both the East and the West through adherence to another Eastern culture. The phenomenon can be understood in terms of globalisation as well as of anti-globalisation.
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In this chapter, the utilization of Artificial Intelligence (AI) and Machine Learning (ML) tools, improved by human expertise, offers a detailed investigation into their…
Abstract
In this chapter, the utilization of Artificial Intelligence (AI) and Machine Learning (ML) tools, improved by human expertise, offers a detailed investigation into their transformative effects on Corporate Social Responsibility (CSR), Environmental, Social, and Governance (ESG) standards, and sustainability. Initial insights and structural foundations were developed using AI, specifically utilizing ChatGPT-4, with the author significantly enhancing the content through in-depth academic research and analysis. This synergistic approach provides a holistic view of AI and ML’s role in promoting ethical business practices, improving sustainability reporting efficiency, and facilitating informed decision-making within CSR and ESG frameworks. Incorporating extensively verified and expanded real-world examples, the work delves into the practical applications of these technologies and addresses the ethical considerations they raise. This collaboration highlights the evolving role of AI in research and emphasizes the critical importance of integrating AI-generated insights with scholarly research to drive forward sustainable and socially responsible corporate strategies and policies.
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Burcin Hatipoglu and Bengi Ertuna
In this chapter, we analyze the interplay between the traditional conception of corporate social responsibility (CSR) and international norms and initiatives to understand…
Abstract
In this chapter, we analyze the interplay between the traditional conception of corporate social responsibility (CSR) and international norms and initiatives to understand business engagement with the development agenda. Drawing on empirical evidence from 50 publicly listed companies, this article delineates the conditions under which CSR can play a constructive role in engaging with grand challenges, addressing development agenda and public policy gaps in a developing country, Türkiye. We defined and used four CSR dimensions to portray the companies’ response to the development agenda: integration with the core business, the extent of reach, instruments for implementation, and collaboration with external partners. Findings indicate that companies acting in line with the local conception of CSR by adopting a social mission beyond business display alignment of their CSR strategy with the global sustainable development agenda by adopting international norms and initiatives.