Subramanian Rama Iyer and Joel T. Harper
The purpose of this paper is to test whether investors take flight to safety when sentiment is low. In other words, do safe firms perform better than risky firms following periods…
Abstract
Purpose
The purpose of this paper is to test whether investors take flight to safety when sentiment is low. In other words, do safe firms perform better than risky firms following periods of low sentiment.
Design/methodology/approach
Using cash flow volatility and the percent of bullish investors as proxies for risk and investor sentiment the paper tests the relationship between sentiment and returns conditional on risk this performance. Second, a cross-sectional analysis is conducted based on individual firm characteristics and sentiment to explain annual returns.
Findings
The paper finds that there is a negative relationship between investor sentiment and the return of risky companies, which is contrary to prior studies. All told, risky companies perform worse following periods of high investor sentiment.
Originality/value
This paper presents evidence contrary to extant literature and that there is no concerted flight to safety. Investor sentiment has little influence on safe stocks.
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Ryan Flugum, Joel Harper and Li Sun
This paper aims to examine the effect employee performance has on subsequent corporate cash holdings.
Abstract
Purpose
This paper aims to examine the effect employee performance has on subsequent corporate cash holdings.
Design/methodology/approach
The authors utilize panel data estimation, including an instrumental variable approach, to identify the relation between employee performance and subsequent corporate cash holdings. These panel data consist of 11,087 firm-year observations over the period 1992 to 2015.
Findings
The authors document a positive and statistically significant relation between firm employee performance and subsequent cash balances. A one standard deviation increase in employee performance is associated with an increase in cash holdings ranging from 1 to 2 percent. The findings support the view that firms seek to accommodate the preferences of better performing employees, thereby requiring greater levels of cash. This positive relation is most evident among firms with low bond ratings and firms with low managerial ability – characteristics that are indicative of a firm's ability to access capital markets.
Originality/value
Better corporate governance of the firm is commonly associated with lower levels of cash. The findings of this paper, however, suggest that holding greater levels of cash may be a consequence of corporate efforts to accommodate the needs of their employees. The predictive content of employee performance is orthogonal to existing determinants of corporate cash holdings shown in the literature. Furthermore, this paper shows the potential for firm cash balances to be an alternative and transparent measure that signals better employee performance and more socially responsible firm behavior.
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Joel Harper and Li Sun
The purpose of this paper is to examine the impact of chief executive officer (CEO) power on corporate social responsibility (CSR) performance.
Abstract
Purpose
The purpose of this paper is to examine the impact of chief executive officer (CEO) power on corporate social responsibility (CSR) performance.
Design/methodology/approach
The authors use regression analysis to investigate the research question.
Findings
Using a 23-year panel sample with 1,574 unique US firms and 8,575 firm-year observations, the authors find a significant and negative relation between CEO power and CSR, suggesting that firms with more powerful CEOs engage in less CSR activities.
Originality/value
The results reveal that more powerful CEOs become less responsive to the needs of stakeholder groups, confirming the validity of the stakeholder theory of CSR.
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Joel Harper and Li Sun
The purpose of this study is to examine the impact of asymmetric information, estimated as the geographic distance between the acquiring firm and the target firm, on goodwill…
Abstract
Purpose
The purpose of this study is to examine the impact of asymmetric information, estimated as the geographic distance between the acquiring firm and the target firm, on goodwill impairment following a merger or acquisition.
Design/methodology/approach
This study uses regression analysis to investigate the research questions of this study.
Findings
This study finds that geographic distance is positively related to the magnitude of current and cumulative goodwill impairment. The results of this study still hold even after robustness checks for other factors that affect mergers and acquisitions and sources of asymmetric information.
Originality/value
This study extends and links two distinct research streams: asymmetric information related to geographic distance studies in finance and goodwill literature in accounting. Specifically, this study extends literature on the impact of geographic distance on various firm characteristics and contributes to research regarding the determinants of goodwill impairment, a major research stream in goodwill accounting (Li and Sloan, 2016). To the best of the authors’ knowledge, this is the first study that performs a direct empirical test on the relation between geographic distance (between the acquiring firm and the target firm) and goodwill impairment.
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The purpose of this paper is to examine retailer response to the use of alternative currency, or scrip, as an emergency measure during the Great Depression. Advocates of scrip…
Abstract
Purpose
The purpose of this paper is to examine retailer response to the use of alternative currency, or scrip, as an emergency measure during the Great Depression. Advocates of scrip argue that it would help recovery efforts, encouraging consumer spending and keeping dollars “at home” within the local community. Merchants face a dilemma, as they hope to use any means to increase sales, but are worried that they would be left holding a stack of worthless paper that they would not be able to pass on to their suppliers. Two cases of scrip in action in Chicago and Atlanta are contrasted.
Design/methodology/approach
This paper draws upon primary data sources including period newspapers from across the USA, business periodicals, archival materials from retailers and city councils, and government reports.
Findings
There is no uniform response to the use of scrip by merchants. Some retailers hope to use scrip to boost sales and encourage consumer loyalty, and even organized their own campaigns to use alternative currency. In other cases, retailers felt the risks of accepting scrip were too high. Without the participation of retailers, scrip schemes were doomed to failure.
Originality/value
In the early years of the Depression, alternative currency enjoyed a remarkable popularity across the USA. It is now known that scrip would not end the crisis, as boosters hoped, yet this episode reveals much about popular understandings of the economy, and the role of retailers in local communities.
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Bank profit warnings represent a milder form of negative news than a bank failure. Yet, they may contain signals about a bank or its rivals because the information is transmitted…
Abstract
Bank profit warnings represent a milder form of negative news than a bank failure. Yet, they may contain signals about a bank or its rivals because the information is transmitted when the bank believes that the market is overly optimistic about its future earnings. Thus, the profit warning serves as a means by which insiders of the bank can reduce the asymmetric information between the bank’s insiders and its investors. We find that banks experience negative valuation effects in response to their profit warnings. The banks’ profit warnings result in significant negative valuation effects for its corresponding rival banks, which implies that the warning carries valuable information about banking industry conditions. However, the effects on rivals are attenuated since the passage of Regulation Fair Disclosure (RFD). This implies that investors may be relying on more transparent sources of information about individual banks rather than relying on one bank’s warning as a signal about other banks. Furthermore, bank regulations may allow for more transparent communication by banks than that of nonbank firms.
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Guoquan Xu, Fang-Chun Liu, Hsiao-Tang Hsu and Jerry W. Lin
The purpose of this paper is to investigate the impact of the public pension governance practices on the public defined benefit pension (DBP) fund performance.
Abstract
Purpose
The purpose of this paper is to investigate the impact of the public pension governance practices on the public defined benefit pension (DBP) fund performance.
Design/methodology/approach
To provide a holistic evaluation of public DBP performance, this study first employs the Data Envelopment Analysis (DEA) approach to construct a relative performance measure that simultaneously takes into account the association between investment inputs and performance outputs across DBPs in our sample. A DEA regression model is then constructed to empirically examine the impact of pension governance on public DBP performance.
Findings
Using 1,544 hand-collected observations in the USA from 2002 to 2013, the findings show that the public DBP plans with a small board, appointed board trustees, and a separate investment council exhibit better performance.
Practical implications
The effectiveness of pension governance has increasingly drawn public attention, as it affects the performance of the public DBP plans that especially matter to public employees. The empirical findings of this research offer insights into recent calls to reexamine public DBP management practices and to carry out related public pension fund policy reforms.
Originality/value
The examination of public DBP governance practices in this study enriches the governance literature, particularly research on public pension funds, by using public sector data. Second, by applying the DEA method to evaluate the relative performance of public DBP funds, this study obtains a more comprehensive analysis of the public pension governance.
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Grant Drawve, Leslie W. Kennedy, Joel M. Caplan and James Sarkos
The purpose of this study is to identify potential changes in crime generators and attractors based on monthly models in a high-tourist destination.
Abstract
Purpose
The purpose of this study is to identify potential changes in crime generators and attractors based on monthly models in a high-tourist destination.
Design/methodology/approach
A risk terrain modeling approach was used to assess spatial relationships between 27 crime generator and attractor types in Atlantic City, New Jersey with robbery occurrence for the 2015 calendar year. In total, 12 separate monthly models were run to identify changes in risk factors based on the month of the year.
Findings
Results indicated unique significant risk factors based on the month of the year. Over the warmer and summer months, there was a shift in environmental risk factors that falls in line with more of a change in routine activities for residents and tourists and related situational contexts for the crime.
Practical implications
The analytical approach used in the current study could be used by police departments and jurisdictions to understand types of crime generators and attractors influencing local crime occurrence. Subsequent analyses were used by Atlantic City Police Department to direct place-based policing efforts.
Originality/value
With growing crime and place research that accounts for temporal scales, the authors advance these endeavors by focusing on a tourist destination, Atlantic City, New Jersey.
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Mathew Baker and Michael Lee Joseph
Examine how social studies preservice teachers conceptualize and enact critical historical inquiry.
Abstract
Purpose
Examine how social studies preservice teachers conceptualize and enact critical historical inquiry.
Design/methodology/approach
Critical qualitative case study.
Findings
Differing conceptual understandings and had trouble infusing their practice with the critical theory learned in the university.
Originality/value
Examine how a core practice is bolstering the practice-theory connection in teacher education.