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We examine the impact of the Citizens United decision on firm value. While the value of U.S. firms do not respond significantly to the Citizens United decision on average, we find evidence that firms in industries subject to more extensive regulation react significantly and positively to the announcement. We also find evidence consistent with Justice John Paul Stevens' argument that the Court decision will affect state laws. Specifically, our results indicate that firms that are headquartered in states with more stringent limits on political spending by corporations respond positively to the announcement. [Reprinted by permission of Sage Publications Inc., copyright holder.]

We examine the impact of the Citizens United decision on firm value. While the value of U.S. firms do not respond significantly to the Citizens United decision on average, we find evidence that firms in industries subject to more extensive regulation react significantly and positively to the announcement. We also find evidence consistent with Justice John Paul Stevens' argument that the Court decision will affect state laws. Specifically, our results indicate that firms that are headquartered in states with more stringent limits on political spending by corporations respond positively to the announcement.

AbstractResearch Question/IssueWe examine how countries' cultural and legal environment, in addition to firm‐level governance mechanisms, affects firms' retention and termination decision of the CEO.Research Findings/InsightsPrevious research focuses primarily on the effects of governance structures and incentives on turnover. In this paper, we focus on two additional institutions—cultural and legal. We find that in cultures characterized by higher individualism, competition, and stronger views that hard work leads to success, boards are more likely to replace CEOs in response to poor shareholder performance. Conversely, we find that in more corrupt cultures and cultures more protective of employees, there is lower turnover–performance sensitivity.Theoretical/Academic ImplicationsWilliamson (2000) provided a framework consisting of four levels of institutional influences on economic activity: (1) cultural norms, (2) the legal system, (3) governance structures, and (4) resource allocation and employment. Previous research focuses primarily on the two highest levels; we focus on the two more basic levels, cultural and legal, while controlling for firm‐level governance.Practitioner/Policy ImplicationsCultural values and legal conditions combine with the firm's governance structure to affect CEO turnover and its sensitivity to firm shareholder performance.

AbstractResearch question/issueWe examine whether linking executive compensation to climate‐related performance is associated with better firm‐level climate change impact. We also explore the interaction of culture and climate‐linked incentive compensation with climate change impact.Research findings/insightsUsing firm‐level climate change strategy and carbon emissions to measure climate change impacts, we find that climate‐linked compensation is associated with improved climate change strategy. Climate‐related incentives for the CEO and other (operational) executives are found to be negatively associated with firm‐level carbon emissions, although the relationship is not as strong; however, no such association is found for climate‐linked compensation of the board and top‐3 executives. Country‐level attitudes to whether solutions for environmental issues are considered a joint (society) responsibility versus an individual's personal responsibility are found to have an effect on the association between climate‐linked compensation and climate change impacts. We also find that country‐level cultural views enhance the positive association between climate‐linked compensation and climate change strategy but not the association with actual firm‐level carbon emissions. Further analysis shows that non‐US firms drive our study's findings. Finally, improvement in climate strategy is found to have a positive effect on Tobin's Q but has no effect on profitability.Theoretical/academic implicationsAcademic research is growing on the role of climate change risk and carbon emissions in corporate decisions. The findings of our study are important given that linking executives' compensation with climate performance is gaining momentum. To the best of our knowledge, this is the first study to examine any link between climate‐linked compensation and climate change impact.Practitioner/policy implicationsWhile climate‐linked compensation is associated with positive changes in climate strategy, its association with firm‐level carbon emissions is promising. This is particularly the case when this compensation is offered to executives who are likely to make operational decisions with a direct impact on a firm's carbon footprint and carbon emissions.