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The purpose of this paper is to determine the initial stock price reaction and long‐run returns for joint venture announcements between US MNCs and foreign governments as well as the firm characteristics and political risk factors of the foreign governments that affect the abnormal returns. In addition we determine changes in total and systematic risk following the joint venture.

Announcement abnormal returns are calculated using event study cumulative abnormal returns. Long‐run returns use a buy and hold methodology. Cross section regressions are performed on both the announcement and long run returns.

Announcement abnormal returns are a positive 0.37 percent; however, the long‐run returns are a significant −3.99 percent the end of the first year. Both short‐run and long‐run returns are higher when the level of internal conflict is low, and surprisingly when the level of corruption is high. Also, surprisingly, short‐run returns are higher when ethnic violence is higher, but, as expected, long‐run returns are higher when there is higher democratic stability.

One implication is that when US managers are confronted by foreign government corruption, there may be a conflict between the success of the project and the ethical/legal requirements of the company.

The paper focuses on joint ventures with foreign governments rather than the usual foreign companies. Also, unlike previous papers that have used only one measure of political risk, this paper uses five of the PRS categories of political risk.

The purpose of this paper is to explore undergraduate student attitudes towards the inclusion of social media training within higher education pedagogy, student perceptions of social media proficiency as professional expertise and its impact on graduate employability.

In all, 81 undergraduate students studying medicine, law, science and arts volunteered to complete an online survey. Questions examined student attitudes towards the delivery of social media pedagogy at university and the perceived benefits of social media proficiency.

Participants stated that social media skills should be taught in optional classes (85 per cent) covering generic competencies (56 per cent). The majority (91 per cent) of respondents reported that social media skills and training were valuable for employability.

This was a pilot study and was therefore limited by the self-selection of participants, sample size and geographic location.

This study identifies that undergraduates across a range of disciplines are receptive to developing professionally relevant social media skills within higher education pedagogy and identify a link between social media proficiency and graduate employability.

Despite the increasing necessity for social media skills in professional environments, few studies have examined the teaching of social media skills as a core competency in higher education. Instead, social media is largely examined in relation to curriculum delivery and student engagement. This study explores attitudes towards the delivery of social media pedagogy at university and the perceived benefits of social media proficiency exclusively from the viewpoint of undergraduate students, to provide an alternative insight rarely explored in the literature.

When organizations face a crisis that is a result of a transgression, crisis scholars suggest that the organization should apologize in order to accept responsibility for the event. In turn, this is expected to reduce the reputation damage to the organization. The assumption is that an apology statement is interpreted by stakeholders to be equal to accepting responsibility; however, this assumption has not been empirically examined. This paper seeks to address that gap.

A three (explicitness of accepting responsibility: none, implicit, explicit) by two (expressing regret: none, explicit) between subjects design was employed. Participants read an article about a crisis event, answered questions about perceived reputation, read one of six organizational responses, and responded to questions about reputation and anger caused by the response.

Results indicate that both accepting responsibility and expressing regret affect perceptions of reputation after a crisis and the anger felt by respondents. Additionally, apologies need an explicit statement of responsibility to increase their benefits for the organization.

Implications of this research include understanding the independent effects that accepting responsibility, expressing regret, and anger have on organizational reputation. Results can be useful for both academics and practitioners when thinking about how to respond to a crisis. Different strengths and limitations are discussed in the text.

The paper tests the assumption that an organizational apology is viewed as equal to accepting responsibility and explores some of the basic propositions of situational crisis communication theory. This study is also one of the first to examine the impact of the crisis response on stakeholder anger.

The purpose of this paper is to explore the role played by the board of directors in corporate sustainability (CS) disclosure within the Asian context in which sustainability reporting (SR) is an emerging phenomenon.

Data are collected from a sample of 100 listed Sri Lankan companies over a period of four years (2012-2016), representing practically all the business sectors. This study draws on both agency and resource dependence theories, while binary logistic regression is performed for the data analysis.

The results point out that firms that follow a sustainability disclosure policy have larger boards, a higher proportion of independent directors and more female directors. Contrary to certain common assumptions, firms that practice sustainability disclosure are not influenced by dual leadership, board ethnicity and board ownership. This study helps firms to understand whether their boards can influence the sustainability disclosure choice or not and further, to validate the appropriateness of the agency theory and the resource dependence theory for examining issues of this nature.

This study contributes significantly to the extant literature on this subject by broadening the geographical coverage, which has generally been limited to the West in corporate disclosure studies.

Using hedging theories, we analyse the variables that determine the decision to hedge with foreign currency debt.

Using a sample of 100 Spanish companies with a significant social and economic role in Latin American during 2004‐2007, we estimated probit models for panel data.

Our results showed that the main determinants are scale economies and the use of derivatives. On the one hand, we found that this hedging is positively related to tax loss carry‐forwards and long‐term economic sectors, and on the other, that it is related negatively to information asymmetries and growth opportunities. Results were mixed for foreign currency exposure.

The limitations of this paper are associated to the availability of information from annual reports and the SABI database, especially the variables in relation to operational hedging. Therefore, as a future line of research, we propose gathering of data on these internal hedging practices in order to obtain more accurate evidence about its use in companies and their relationship with financial hedging.

This paper makes three major contributions to the existing literature. First, it contributes by illustrating currency hedging practices used by Spanish firms – which are important in Latin markets – to manage exchange rate exposure in. Second, we used more variables for the empirical analyses to contrast the hedging theories than previous studies had. Finally, we used a data panel because it allows the control of unobservable heterogeneity and endogeneity problems. Previous studies only used cross‐section estimations.

Este trabajo analiza la cobertura cambiaria con deuda en divisa utilizando las teorías de cobertura.

Se estimaron modelos probit para datos de panel usando una muestra de 100 empresas españolas con un papel económico‐social relevante en Latinoamérica durante el período 2004‐2007.

Los resultados muestran que esta cobertura se relaciona principalmente con las economías de escala y el uso de derivados. Asimismo, existe una relación positiva con la convexidad impositiva y la localización empresarial en sectores orientados al largo plazo, y negativa con las asimetrías informativas y oportunidades de crecimiento. No existe evidencia concluyente para la exposición cambiaria.

La investigación tuvo como limitación la disponibilidad de algunos datos en los informes anuales de las empresas y la base de datos SABI, en especial, aquellos referidos a la cobertura operativa. En consecuencia, una línea de trabajo futura es la mejora de la información sobre esta cobertura, lo cual permitiría aportar mayor evidencia sobre su utilización y su relación con la cobertura financiera.

Esta investigación realiza tres contribuciones a la literatura existente: a) permite un mejor conocimiento de la cobertura cambiaria en empresas españolas internacionales que ejercen un papel relevante en los mercados latinoamericanos; b) utiliza un conjunto de variables más amplio para contrastar las teorías de cobertura que el aplicado en estudios precedentes; c) emplea la metodología de datos de panel y no estimaciones en sección cruzada como presentan los trabajos previos, lo cual permite controlar la heterogeneidad inobservable y posibles problemas de endogeneidad.

This study investigates whether the disclosure of derivatives is value relevant in emerging markets and evaluates the effects of the 2008/2009 global financial crisis on the value relevance of derivative disclosures.

Panel regression models using sub-samples and a crisis interaction term were applied to a sample of the 200 largest non-financial firms by market capitalization listed on the Johannesburg Stock Exchange (JSE) from 2005 to 2017 to assess the consequences of the financial crisis.

The results suggest that the disclosure of derivatives is value relevant in the hitherto understudied context of emerging markets. The 2008/2009 financial crisis had a significant impact on derivatives use and the value relevance of derivatives disclosure by JSE-listed companies.

Companies should reconsider both how they employ derivatives as part of their risk management practices and how they communicate derivatives use to stakeholders in the financial statements. The findings facilitate a comparative analysis across various market contexts by researchers and assist investors in better decision-making. The findings can influence regulatory practices and can help standard setters to review disclosure requirements.

The benefits of corporate hedging were studied from an emerging market perspective, using an original dataset and approach to investigate the effects of international financial volatility on emerging markets. The authors tested whether companies are valued differently, based on their disclosure of the use of derivatives in the financial statements, and the effect of the financial crisis on the value relevance derivatives disclosures.

We investigate the interaction of debt covenants and tax accounting on the adoption of Financial Interpretation No. 48 (FIN 48). We examine how firms respond to the potential tightening of covenant slack upon FIN 48 adoption and whether these actions are penalized by creditors and anticipated by equity markets. We find that upon FIN 48 adoption, the majority of sample corporate borrowers increase their tax reserves and reduce equity. Firms close to debt covenant violation were even more likely to increase tax reserves upon FIN 48 adoption; however, the size of the adjustment was relatively smaller, suggesting that the FIN 48 standards limited, but did not eliminate, firms use of discretion in reporting uncertain tax positions to avoid costly covenant violations. For firms near net worth debt covenant violation, the act of decreasing equity upon FIN 48 adoption imposes real economic costs, as the average cost of debt increased by 43 basis points. Finally, we extend prior research on the market response to FIN 48 by showing how the market response to FIN 48 adoption is a function of debt covenant slack and tax aggressiveness. Specifically, the cumulative abnormal return at the FIN 48 exposure draft release date is negative only for tax aggressive firms that are close to debt covenant violation.

Although situational crisis communication theory (SCCT) is centered on rationality and cognitive information processing, it ignores that people are also driven by irrationality and non-cognitive information processing. The purpose of this study aims to fill this gap by examining how gender stereotypes, based on perceived spokesperson sex influence the public’s perceptions of crisis response messages.

A 2 (industry type: automotive vs daycare industry) × 2 (spokesperson’s sex: male vs female) × 2 (crisis response appeal: rational vs emotional) between-subject online experiment was conducted to examine the effect of gender stereotype in crisis communication.

Results showed that either matching spokesperson sex with sex differed industry or matching sex differed industry with appropriate crisis response appeal can generate a more positive evaluation of the spokesperson and the organization. The results also revealed under which circumstances, the attractiveness of different sex of the spokesperson can either promote or mitigate people’s perceptions of the organization. Furthermore, when people are aware of a spokesperson’s sex, in a female-associated industry, a mismatching effect of a positive violation of a male-related stereotype overrides a matching effect of a female-related stereotype in crisis communication.

This study is among the first to identify how the gender of a spokesperson and industry type affect publics’ crisis response.

The purpose of this paper is to examine whether a negative outcome (i.e. a sanction) of an inspection by Korea’s Financial Supervisory Service for an industry-leading company affects the accounting quality of other companies in the same industry. The premise is that when peer companies observe the negative results of such an inspection on a leader in their industry, they will be more concerned about their own risk during a future inspection and more likely to increase their accounting quality.

The authors conduct a mutivariate Oridnary Least Squares (OLS) regression using 11,476 South Korean samples from 2002 to 2016. The study uses ordinary least square regressions to test the hypotheses using discretionary accruals as a proxy for accounting quality.

The authors find that peer companies reduced their discretionary accruals in the next period and that this reduction is amplified according to the severity of the disciplinary action on the industry leader and the materiality of errors in that leader’s financial statements.

This finding contributes to the literature by providing the first evidence of a spillover effect of regulatory inspection on accounting quality that financial reporting sanctions not only affect the overall accounting quality of the sanctioned company but also that of its peers in the same industry. The authors expect this study to lead to future research on the effect of other regulations on industry-wide accounting quality.

This paper aims to apply the Capital Market Liability of Foreignness (CMLOF) framework to the audit fees of a sample of foreign firms listed on US exchanges to examine whether American auditors price foreignness.

The four components of the CMLOF are institutional distance (civil versus common law system and enforcement), information asymmetry (disclosures and mandatory IFRS adoption), unfamiliarity (exports, English language and geographical distance) and cultural difference [Hofstede (1980) dimensions of culture]. These variables are examined in a regression model that explains audit fees to determine the auditor perception of risk associated with the CMLOF.

Examining the factors that mitigate perceived agency costs, this investigation determines that auditors price risk according to each component of the liability of foreignness. Audit fees are higher for shareholders of firms headquartered in countries exhibiting greater institutional distance, unfamiliarity and cultural distance. Audit fees are higher for firms when their home country requires additional disclosures or the adoption of IFRS to reduce information asymmetry.

CMLOF is costly for capital market participants and has implications for auditors, shareholders of foreign firms and managers considering listing in the US Auditors, and investors should carefully assess this risk for pricing and valuation, and managers should take action, to the extent possible, to reduce the firm-specific level of unfamiliarity and increase transparency.

This paper is the first to apply the CMLOF to examine whether auditors price aspects of foreignness of their non-US-headquartered clients.