Suchergebnisse

AbstractThe recent popularity of write‐offs allows for examination of the role governance plays in the write‐off decision. I find that well governed companies are more likely to announce write‐offs. Additionally, better governed firms announce smaller write‐offs relative to poorly governed firms. The evidence also indicates that the stocks of well governed firms experience announcement abnormal returns that are over six percent higher than those of poorly governed firms. The results suggest better governed firms take a pro‐active approach to reveal bad news early, and thereby mitigate further uncertainty for investors.

AbstractSocial capital potentially influences corporate outcomes by reducing the likelihood of managerial self‐serving behavior. This expectation follows from the likelihood that the consequences of self‐serving behavior are severe for firms in high‐social‐capital areas. Thus, we employ a sample of firms that backdated option grants to examine these propositions. Accordingly, we find a negative and significant relation between social capital and the probability and magnitude of backdating. Furthermore, we find a positive and significant relation between social capital and likelihood, as well as between the speed of the termination of senior executives and board members following option backdating. Notably, we find evidence for the notion that community norms can influence corporate behavior by creating an environment where self‐serving or bad behavior has severe consequences.

AbstractWe investigate how director incentives affect the occurrence of firms' backdating employee stock options. Directors with more wealth tied up in stock options may pursue activities that lead to personal gain, such as option backdating, which potentially increases the option recipient's compensation. We document a positive and significant association between director option compensation and the likelihood that firms backdate stock options. Our results question the effectiveness of director option compensation in aligning the interests with those of shareholders and help to explain the recent decline in the use of director option grants by many firms.

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.

AbstractWe investigate the influence of gender diversity on the acquisition choices of bidding firms and find that firms with greater gender diversity are more likely to acquire nonlisted targets, use cash as the method of payment, and purchase firms in similar industries. Results show that these preferences are significantly influenced by female directors' financial expertise, target industry experience, mergers and acquisitions (M&A) experience, academic and professional qualifications, and networks. The percentage of female directors on boards is positively correlated with the market response to the announcement of acquisition choices preferred by female directors. Furthermore, bidders improve efficiency and accumulate long‐term value gains through the contributions made by their female directors to these acquisition choices.

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.

AbstractResearch Question/IssueWe examine the association between foreign institutional ownership and climate change disclosure quality from 2006 to 2018 across 34 countries. We find that firms with a higher level of foreign institutional ownership demonstrate better quality climate change disclosures, whereas domestic institutional ownership has immaterial impacts on such disclosures. We utilize a difference‐in‐differences (DiD) analysis using a firm's addition to the Morgan Stanley Capital International (MSCI) index as an exogenous shock to control for endogeneity. Our findings are robust to various other endogeneity controls. We also establish evidence on an indirect effect of climate change disclosure quality in mediating the positive association between foreign institutional investors and firm valuation.Research Findings/InsightsWe find that the positive association between foreign institutional ownership and climate change disclosure quality is more pronounced for (1) firms domiciled in stakeholder‐orientated countries, (2) firms domiciled in countries that adopt emission trading schemes, and (3) firms with a greater level of information asymmetry. Additionally, our results are more robust when foreign investors are domiciled in countries that care more about the environment.Theoretical/Academic ImplicationsOur study contributes to climate change disclosures, corporate governance, and international business literature by showing that foreign rather than domestic institutional investors contribute to improved corporate climate change disclosure quality in their portfolio firms.Practitioner/Policy ImplicationsOur study urges regulators to increase their market oversight, especially in firms with less foreign institutional ownership. This is required because such firms are prone to exhibiting poorer accountability for their climate risk management practices, and their disclosures are bereft of effective external monitoring mechanisms.