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This study aims to show the difference between the two types of oil price volatility resulting from either increases or decreases in oil prices and find evidence of the differential effect of oil price volatility on firms' environmental initiatives.

This paper examines how volatility in crude oil prices affect corporate environmental responsibility among US firms (excluding oil and gas producers) between 2002 and 2020, with a particular focus on the differential impact of oil price volatility.

The authors find that a one standard deviation increase in oil volatility resulting from positive changes in oil prices corresponds to a 12.7% decrease in environmental score, while the same increase in volatility from negative changes in oil prices leads to a 5.5% decrease in environmental score. Financial constraints are identified as a potential channel through which oil price volatility influences environmental activities. Specifically, a one standard deviation increase in oil volatility from positive price changes leads to an 18% decrease in environmental score for firms with high financial constraints, compared to an 8% decrease for firms with low financial constraints.

This study builds on the research of Phan et al. (2021) and Maghyereh and Abdoh (2020). Pan et al. reveal a negative association between oil price uncertainty and corporate social responsibility in the oil and gas sector, yet they overlook 1) the asymmetric impacts of oil price changes and sectoral disparities. Moreover, 2) their inclusion of a year-fixed effect undermines their findings’ reliability, as the oil price volatility variable remains constant across all firm-year observations, and including a year-fixed effect diminishes its explanatory power.

The purpose of this study is to investigate the effects of two important financing sources, debt and cash, on a firm’s investment decisions and explores the intertemporal impact of this financing on future investment volatility.

This paper first reports our results using ordinary least squares (OLS) estimation and then employ an instrumental variable (IV) strategy which addresses potential endogeneity that arises from future investment volatility on current capital structure and cash levels.

This paper finds firms with low levels of debt or high levels of cash experience higher future investment volatility, and the probability of large future investment increases with high cash levels. This study’s findings are economically important; for example, a one-standard-deviation increase from the mean of debt ratio implies an approximate 7.8% decrease in future investment volatility; and a one-standard-deviation increase from the mean of a firm’s cash level leads to a 47% increase in the probability of a large investment in the next year.

The findings of this study help firms understand the impact of their present financing decisions on the plausibility of their future investments. This paper contributes to the literature by making both novel and confirmatory findings. This paper was structured to include confirmatory findings for two reasons. First, this paper uses different methods to construct investment volatility and the related investment spike. Second, and more importantly, the hypotheses are interrelated and communicate how firms plan for and execute against uncertain future investments. Growth options are ephemeral, and the hypotheses structure provides a guideline for how a firm finances future growth options.

This paper aims to review the relevant literature on mergers and acquisitions in an attempt to provide a comprehensive account of what we know about mergers and which parts of the puzzle are still incomplete.

This literature review consists of three key sections. The first part of this paper summarises the literature on the cyclical nature of mergers referred to in the literature as merger waves. The second section reviews the causes and consequences of takeovers; it first reviews the causes, or drivers, of acquisitions, while focusing on the fact that acquisitions happen in waves and then reviews the consequences of takeovers, with a predominant focus on the impacts of mergers on the economic performance of acquirers. The third part of the review summarises the theories, as well as previous empirical studies, on determinants of announcement returns and post-acquisition performance of combined firms.

Merger activity demonstrates a wavy pattern, i.e. mergers are clustered in industries through time. The causes suggested for this fluctuating pattern include industry- and economy-level shocks, mis-valuation and managerial herding. Market reaction to announcement of acquisitions is, on average, slightly negative for acquirer stocks and significantly positive for target stocks. The combined abnormal return is positive. These findings have been consistent over several decades of investigation. Prior research also identifies a number of factors that are related to performance of acquisitions. These factors are categorised and reviewed in five different groups: acquirer characteristics, target characteristics, bid characteristics, industry characteristics and macro-environment characteristics.

This review illustrates a number of issues. Prior research is heavily biased towards gains to acquirers and factors that affect these gains. It is also biased towards finding sources of value creation through mergers despite the fact that several theories suggest that mergers can be value-destroying. In fact, value destruction is often attributed to managers’ self-interest (agency problem) and mistakes (hubris). However, the mechanisms through which mergers destroy value are rarely addressed. Aside from that, the possibility of simultaneous creation and destruction of value in acquisitions is not often considered. Finally, after several decades of investigation, a key question is not completely answered yet: “What are the sources of value in mergers and acquisitions?”

This paper aims to review the relevant literature on mergers and acquisitions in an attempt to provide a comprehensive account of what we know about mergers and which parts of the puzzle are still incomplete.

This literature review consists of three key sections. The first part of this paper summarises the literature on the cyclical nature of mergers referred to in the literature as merger waves. The second section reviews the causes and consequences of takeovers; it first reviews the causes, or drivers, of acquisitions, while focusing on the fact that acquisitions happen in waves and then reviews the consequences of takeovers, with a predominant focus on the impacts of mergers on the economic performance of acquirers. The third part of the review summarises the theories as well as previous empirical studies on determinants of announcement returns and post-acquisition performance of combined firms.

Merger activity demonstrates a wavy pattern, i.e. mergers are clustered in industries through time. The causes suggested for this fluctuating pattern include industry and economy-level shocks, mis-valuation and managerial herding. Market reaction to announcement of acquisitions is, on average, slightly negative for acquirer stocks and significantly positive for target stocks. The combined abnormal return is positive. These findings have been consistent over several decades of investigation. The prior research also identifies a number of factors that are related to performance of acquisitions. These factors are categorised and reviewed in five different groups: acquirer characteristics, target characteristics, bid characteristics, industry characteristics and macro-environment characteristics.

This review illustrates a number of issues. Prior research is heavily biased towards gains to acquirers and factors that affect these gains. It is also biased towards finding sources of value creation through mergers, despite the fact that several theories suggest that mergers can be value-destroying. In fact, value destruction is often attributed to managers’ self-interest (agency problem) and mistakes (hubris). However, the mechanisms through which mergers destroy value are rarely addressed. Aside from that, the possibility of simultaneous creation and destruction of value in acquisitions is not often considered. Finally, after several decades of investigation, a key question is not completely answered yet: “What are the sources of value in mergers and acquisitions?”