Shuojia Guo, Seokyoun Hwang and Chenglu Wang
This paper aims to examine the B2B advertising effect on firm’s market value and whether/how its effectiveness can be enhanced with corporate social responsibility (CSR) strengths.
Abstract
Purpose
This paper aims to examine the B2B advertising effect on firm’s market value and whether/how its effectiveness can be enhanced with corporate social responsibility (CSR) strengths.
Design/methodology/approach
The authors propose that CSR can be a strategic complement to advertising and reinforce the latter’s positive effect on a firm’s performance in two logics: signaling mechanism and defensive mechanism. Using the Kinder, Lydenberg, and Domini database and final data obtained from Compustat, the authors applied fixed effect regression analysis to test the interaction effect of advertising expense and CSR strengths on firms’ market performance as operationalized in Tobin’s Q.
Findings
The result confirms that CSR moderates the B2B advertising effect on a firm’s market value. More importantly, the authors find that internal CSR activities that are closely related to a firm’s core business, compared to external CSR activities, more significantly enhance the advertising effectiveness on a firm’s market value.
Practical implications
This research provides guidelines for B2B firms to better prioritize resource allocation to CSR practices for achieving a better financial outcome.
Originality/value
The current study on the joint effect of advertising and CSR has important theoretical and managerial implications, given both tools are commonly used by most B2B firms but not necessarily integrated into one corporate marketing strategy.
Details
Keywords
Seokyoun Hwang and Bharat Sarath
The purpose of this paper is to examine whether the expected rate of return (ERR) management is related to disclosure of pension asset allocation. FAS 132R(1), which requires…
Abstract
Purpose
The purpose of this paper is to examine whether the expected rate of return (ERR) management is related to disclosure of pension asset allocation. FAS 132R(1), which requires firms to disaggregate the detailed categories of pension asset allocation, provides a natural experiment setting for investigating the effect of enhanced transparency on firm behavior.
Design/methodology/approach
The authors focus on the variation of voluntary disclosure and its effect on ERR management under the two different reporting regimes. The authors measure the variation of voluntary disclosure of the pension asset allocations in the pre-period of FAS 132R(1), by using the self-constructed disclosure score.
Findings
First, firms create flexibility in their choice of ERR through opaque disclosure of pension asset allocation. Next, firms with poor disclosures are more likely to adjust ERR downward when accounting standards require greater transparency, implying that, for firms with poor disclosures, mandated transparency in pension asset allocation plays a vital role in reducing the ERR management.
Research limitations/implications
The authors directly illustrate the impact of FAS 132R(1) on ERR management. The authors find that the impact of mandated transparency is not uniform across firms. Next, this study highlights the importance of disclosure in restricting managers’ earnings management motivation.
Originality/value
The authors hand collect the asset allocations under pre-FAS 132R(1) period from the 10-K pension footnotes for all S&P 500 firms, which allows the authors to identify the disclosure variation amongst the firms. Based on the variation of disclosure, the authors construct the ordinal measure of disclosure scores on which the testing indicator variables are built.