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PurposeThis paper aims to provide empirical evidence on the impact of a corporate label change (CLC) from investors' perspective, especially based on the stakeholder approach to corporate identity. The resource-based theory has been used as a theoretical root of understanding the antecedents and consequences of brands. The authors specifically examine how two important types of firm-level heterogeneity – firm size and firm age – change shareholder reactions. In addition, the authors also test the moderating effects of firm performance.Design/methodology/approachUsing Korean company data, the authors first calculate the cumulative abnormal return (CAR) with the two-day event window [−1,0]. Then, the authors test the impacts of firm size and age on CAR with ordinary least squares regressions. To understand greater dynamics, the authors also test the moderation effects of firm performance. For the robustness check, the authors test using a different event window and different measures as well.FindingsThe findings for South Korean companies reveal that CLC itself does not significantly affect shareholder value. However, firm size and firm age show positive and significant coefficients. This means that larger and older firms are more likely to have better investor reactions. In addition, the authors also test a moderation effect of firm performance. The result shows that the impact of firm size weakens when firms have better performance.Research limitations/implicationsThe first limitation is the generalizability of the findings, particularly those regarding the impacts of CLC on investor reactions. A second limitation is that the authors did not consider the time gaps between CLCs. Third, there are limitations of using an event study with stock market data due to the ambiguity of the causal relationship between a firm's strategic choices and market reactions. Lastly, the authors use all CLCs except CLCs related to corporate governance (i.e. mergers and acquisitions).Practical implicationsAlthough managers expect positive relations by introducing new corporate label, the outcomes may not be sufficient because potential losses (i.e. losing royal customers) are significant. Hence, more careful considerations are required when a manager forms a new CLC. The results provide valuable insights for the conditions when large and aged companies pursue CLCs. In addition, the needs of a CLC are increasing when a company shows underperformance. Poor performance is a trigger for introducing new strategic choices (Boeker, 1997). The finding can be another supporting material for managers to consider when they intend to perform CLCs.Originality/valueThe authors probe the effect of CLC on external stakeholders, particularly investor reactions. The current literature has discussed the impacts of CLC on employees, internal stakeholders, and customers, external stakeholders. To the best of the authors' knowledge, there is no strategy for understanding a CLC under stakeholder aspects. The authors believe that the findings contribute to the extant literature on CLC. This question is also important to a manager. Although introducing a new corporate label is a popular strategy for firms to provide corporate identity to various stakeholders, many cases have shown mixed results. This research provides evidence of what to consider when a manager makes its decision.

AbstractThis study investigates the association between CSR and the market pricing of accounting income numbers' persistence. More specifically, we examine whether the market evaluation of earnings persistence relies on the firm's CSR activities. We find that the market overestimates the persistence of earnings, leading the market to overprice the earnings for CSR companies in Korean setting. We also find that market overprices components of earnings, which are accruals and cash flow from operations, for CSR companies. However, results show that the level of CSR activities does not affect investors' rational pricing of earnings. This study suggests that market participants prefer companies engaging in CSR activities because they are more likely to provide better financial performance and earnings quality. This preference leads investors to overestimate the persistence of earnings and its components for CSR companies.

We examine the role of debt as a governance mechanism in balancing exploration and exploitation. We argue that while equity is conducive to uncertain exploration critical for innovation, debt provides countervailing incentives for engaging in exploitation by imposing cash flow obligations and the threat of bankruptcy. As a consequence, debt becomes a vital instrument in directing innovation along the optimal trajectory, while preventing the balance from shifting too far toward suboptimal exploration. To support our arguments, drawing on patent data, we first demonstrate that a firm's leverage is positively related to knowledge exploitation activity as reflected in its self-citations. Next, we show that firms that have potentially engaged in suboptimal exploration, as manifest in underutilized stocks of proprietary knowledge, are likely to experience leverage increases in the short run, and these leverage increases in turn result in subsequent increases in self-citations. These effects are consistent with firm value indicating that equity holders value the role of debt in stimulating exploitation. Our study draws attention to the complementary roles of equity and debt as governance mechanisms in balancing exploration/exploitation, while outlining the role of debt in innovation in greater depth.

PurposeThe foreign direct investment (FDI) motivations of emerging market multinational enterprises (EMNEs) are mainly twofold: acquisition of strategic assets in foreign markets, and foreign market penetration. While prior studies have delivered valuable insights, findings regarding the performance of those two types of FDI remain somewhat inconsistent or inconclusive. This study aims to develop complementary perspectives that can motivate scholars to explore the internal mechanisms of achieving goals for these two FDI types by providing a review of prior literature on EMNEs' knowledge- and market-seeking FDI.Design/methodology/approachIndexed to the EBSCO database and Google Scholar from 2000 to 2020, 73 articles from 13 journals were selected and reviewed to identify the main research future research agendas.FindingsOur findings show that the purpose of EMNEs' FDI can be divided into value creation and value capturing, with the former pursuing knowledge-seeking and the latter pursuing market-seeking, according to our study, which draws on insights from innovation-focused literature.Originality/valueInternational business (IB) scholars have extensively studied both knowledge-seeking and market-seeking outward FDI of EMNEs for decades. Our study contributes to the literature by providing the potential for integrating IB and innovation studies to extend the scope of EMNEs studies.