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This study examines bank practices of corporate loan pricing in the Asia‐Pacific region. We find that the all‐in‐spread for loans (mostly term loans with longer maturities) in the Asia‐Pacific region are significantly smaller than those in the US. In addition, foreign banks tend to price their loans favorably in the Asia‐Pacific region, while foreign banks in the US have a higher loan spread. This finding indicates that foreign banks foster more competitive loan pricing in the Asia‐Pacific region, while foreign banks in the US seem to experience a competitive disadvantage compared to domestic lenders.

PurposeThis paper aims to examine the relationship between the nationality and educational background diversity of directors serving on corporate boards and the firms' corporate social performance (CSP).Design/methodology/approachThis study measures nationality diversity by directors' national citizenship and measures educational background diversity by countries from which they earned their undergraduate and post undergraduate degrees. It measures firms' CSP using the MSCI ESG ratings. The study uses both univariate and multivariate analyses to empirically test the hypotheses.FindingsUsing a sample of US firms, the authors find that board nationality diversity and educational background diversity are positively associated with CSP. The findings suggest that improving director nationality diversity and educational background diversity could improve firms' social performance.Originality/valueThis study shows that the increasing trend of foreign nationals in the US boards could shift the focus of US corporations to be more stakeholder-oriented.

Firms operate in a capital market, a product market, and a market for social pressure directed at them by social activists, NGOs, and governments. An equilibrium in these three markets yields a three-equation structural model that relates corporate financial performance (CFP), corporate social performance (CSP), and social pressure. This paper estimates the simultaneous equation model for a panel of over 1,600 firms and finds that CFP is uncorrelated with CSP and negatively correlated with social pressure. CSP is decreasing in CFP and increasing in social pressure. Social pressure is increasing in CSP and decreasing in CFP, which is consistent with social pressure being directed to soft targets. Disaggregating the panel indicates that CFP is positively correlated with CSP for firms in consumer markets and negatively correlated for industrial markets. For consumer markets, CSP is increasing in CFP, which is consistent with a perquisites hypothesis that managers spend on CSR when they can afford it. For industrial markets CSP is decreasing in CFP, which is consistent with a moral management hypothesis. For both consumer and industrial markets, CSP is responsive to social pressure.

AbstractA growing group of institutional investors use divestment strategically to deter misconducts that are harmful for the climate and society. Based on Kantian ethics, we propose that divestment represents investors' universal and absolute moral commitment to socially responsible investing (SRI). Following categorical and hypothetical imperatives and reciprocity as a norm, we hypothesize how institutional investors' commit to SRI through a divestment strategy against ethically reprehensible behaviour of banks, especially when these investors represent banks themselves. Using a hand-collected database of the revelation dates of enforcement actions on banks, we find evidence that banks are less likely to divest equity holding on banks with misconduct (fined banks) than their non-bank institutional investors peers. Banks that commit to invest responsibly by signing for the Principles for Responsible Investment (PRI) are not significantly more likely to divest on fined banks stocks than non-signatory banks. Moreover, divestment of fined banks whose own legitimacy to operate is in question is not significantly different from non-fined banks divestment. We find that European banks are more inclined to sell their holdings permanently on fined banks than their United States peers. Therefore, bank's moral commitment to SRI via divestments is influenced more by cultural and reciprocity norms than their moral commitment to participate in the PRI.