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This paper provides both theoretical perspectives and empirical evidence on the relationship between mergers and acquisitions (M&As) and corporate innovation. It also identifies relevant policies implemented by countries around the world to encourage corporate innovation activities, and discusses the experience from which policy makers and practitioners in Asia could learn lessons from. Finally, it makes policy recommendations to promote innovation in both emerging and developed economies in Asia at different stages of development.

This paper analyzes the impact of COVID-19 on firm-level stock behaviors (including stock price volatility, trading volume and stock returns). Using US data, this paper examines whether confirmed cases (and deaths) of COVID-19 or COVID-19-associated online searches affect stock behaviors. The results show that our five COVID-19 proxies are all positively associated with stock price volatility and trading volume and negatively associated with stock returns. This paper further investigates the mitigating effect of corporate governance (viz., board and ownership structures) in this COVID-19 crisis. Overall, the results suggest that good corporate governance can mitigate the impact of COVID-19 on stock price volatility and trading volume but may not help to enhance stock returns. This paper also considers key policies used to tackle the COVID-19 pandemic and finds that government intervention plays an important role in stabilizing stock markets in this COVID-19 crisis.

AbstractThis study examines whether future stock returns and earnings persistence decline when a firm has issued equity within 1 month of its earnings announcement (post‐EA equity financing), considering managerial ability and overconfidence. The results show that when overconfident managers engage in post‐EA equity financing, buy‐and‐hold returns significantly decrease in the subsequent month and earnings persistence is low within the subsequent year. However, firms with overconfident, high‐ability managers do not experience lower returns following post‐EA equity financing and have larger earnings variability within the subsequent 3 years. The decline in returns in the month during post‐EA equity financing is more pronounced for firms with high financial constraints or low financial flexibility with overconfident managers. Overall, our results highlight the managerial traits of firms that engage in equity issuance after information release.

AbstractConsistent with theoretical predictions, we find that both a higher level of financial leverage and a faster speed of adjustment of leverage toward the shareholders' desired level are associated with better corporate governance quality as defined by a more independent board featuring CEO–chairman separation and greater presence of outside directors, coupled with larger institutional shareholding. In contrast, managerial incentive compensation on average discourages use of debt or adjustments toward the shareholders' desired level, consistent with its entrenchment effect. The effect of corporate governance on leverage adjustments is most pronounced when initial leverage is between the manager's desired level and the shareholders' desired level where the interests of managers and shareholders conflict.

AbstractThis study investigates the responsiveness of a social responsibility index's returns to cash flow news compared with a broad stock index. The study contributes by comprising the synergy of corporate social responsibility to reflect the influence of the macroeconomy and by increasing model appropriateness. The empirical results show that cash flow news is the primary factor to drive both index returns, but the effect is stronger for the S&P 500 Index. Consistently, the investors of the S&P 500 Index react to cash flow news appropriately. Before adding the macroeconomic state variable, cash flow news under explains FTSE4Good US 100 Index returns, but investors overreact to that information. After adjusting, the explanation power of cash flow news increases, and its investors rather underreact to that information.