Research summary: We explore the effect of the interplay between a firm's external and internal actions on market value in the context of corporate social responsibility (CSR). Specifically, drawing ...from the neo-institutional theory, we distinguish between external and internal CSR actions and argue that they jointly contribute to the accumulation of intangible firm resources and are therefore associated with better market value. Importantly, though, we find that, on average, firms undertake more internal than external CSR actions, and we theorize that a wider gap between external and internal actions is negatively associated with market value. We confirm our hypotheses empirically, using the market-value equation and a sample comprising 1,492 firms in 33 countries from 2002 to 2008. Finally, we discuss implications for future research and practice. Managerial summary: Companies often accumulate intangible assets by taking internally and externally oriented CSR actions. Contrary to popular beliefs, the data show that they undertake more internal than external ones: firms do more and communicate less. How does a potential gap (i.e., a misalignment) between internal and external CSR actions affect a firm's market value? We find that although together (the sum of) internal and external actions are positively associated with market value, a wider gap has negative implications. In other words, firms do not realize the full benefits of their internal actions when such actions are not externally communicated to key stakeholders, and to the investment community in particular. This negative association with market value is particularly salient in CSR-intensive and the natural resources and extractives industries.
ESG—environment, social and governance—was first introduced in a 2004 report by the United Nations' Global Compact. The institutions1 that participated in the Financial Sector Initiative and endorsed ...the report believed that:
Research on firm performance and corporate social performance (CSP) has recently broadened to concurrently evaluate corporate social irresponsibility (CSI) with corporate social responsibility (CSR). ...However, little is known about the underlying mechanisms that impact the performance relationship, particularly the duration of the influence of CSR initiatives and CSI incidents and the impact of the interaction of CSR and CSI on firm performance. This research expands understanding by examining the combined impact of “doing good” and “doing bad” to allow a more robust examination of a firm's regime in pursuing a better strategic position through social performance. We examine the effects of CSR and CSI and their combined effects using a moderating high-low matrix. The empirical findings provide two uniquely interesting findings: CSI incidents have a longer enduring effect than CSR initiatives and those firms doing little CSR and little CSI perform better than firms engaging in high levels of both.
The upper echelons theory postulates that the cognitive frameworks of top executives shape organizational decisions and behaviors. Based on this theory, this study contributes to the literature by ...analyzing the effects of the chief executive officer's (CEO) political ideology and political climate on variations in the market value of tourism firms resulting from their innovation activities. An empirical application was conducted on major U.S. hotel companies that have traded on the stock market for the last 25 years (1998–2022) and made innovation-related announcements. This application shows that, although the implementation of innovative activities positively affects a firm's market value, both the CEO's political ideology and the political climate influence the degree of change in the said market value. This study has fundamental theoretical implications for upper echelons theory by improving the understanding of how cognitive diversity derived from political ideology influences decision-making and its outcomes.
We examine the interrelationships among executive compensation, environmental‐social‐governance‐based (ESG) sustainable compensation policy, carbon performance and market value. Using one of the ...largest datasets to date, consisting of 4379 firm‐year observations, covering a period of 15 years (2002–2016) from 13 industrialized European countries and insights from neo‐institutional theory (NIT), our findings are fourfold. First, our results suggest that process‐oriented carbon performance is positively associated with market value, whereas actual carbon performance has no effect on market value. Second, we show that the market value–process‐oriented carbon performance nexus is moderated by executive compensation. Third, our results indicate that executive compensation has a positive effect on process‐oriented carbon performance, but has no similar effect on actual carbon performance. Fourth, we show that the process‐oriented carbon performance–executive compensation nexus is reinforced for companies that adopt ESG‐based sustainable compensation policy. Our results are generally robust to controlling for governance mechanisms, alternative measures/estimations and endogeneities. Overall, our evidence supports the legitimization aspect of NIT and suggests that the market tends to reward firms with superior process‐oriented carbon performance instead of undervaluing firms with excessive actual carbon emissions. This implies that firms appear to use incentive‐based mechanisms to symbolically improve their process‐oriented carbon performance without substantively improving their actual carbon performance.
To navigate the unchartered terrain that has resulted from the pandemic, there is a palpable need for hotels to re-assess current business practices, and quickly devise new and innovative strategies ...that safeguard the health and safety of guests as well as employees and, consequently, restore consumer confidence. The objective of this article is to assess the utility of these new innovations by looking at shareholders' perceptions. The empirical application shows that the innovations implemented are seen as effective, although differential effects exist among innovation types. The results could help hotels sustain and expand the innovative responses that work (among which product innovations stand out), and discontinue those that are less effective.
•Hotels' COVID-19 innovations are perceived to be effective.•Not all innovations that have been deployed have a similar effect on performance.•Product innovations provide the highest level of confidence.
Stigmatized Properties: Filter Theory Hajnal, I
IOP conference series. Materials Science and Engineering,
01/2022, Letnik:
1218, Številka:
1
Journal Article
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Abstract
International literature does not treat stigmatized properties in a uniform manner. In the proposed article, the Author employs the following definition: “A stigmatized property is one ...assigned with a real or perceived negative external effect on the users. That external effect modifies or reduces property market value through a specific, multilayered filter.” Many property-related stigma cases are mentioned in the literature, such as high-voltage lines, noise, air pollution, airports, haunted properties, and many other similar situations. The various stigmas, as well as identical stigmas on different properties, have been assessed individually so far. Knowing the depreciating mechanism of a stigma allows for valuers the uniform handling of stigmas on different properties, as well as understanding the depreciating mechanisms of new stigmas. Using extensive literature research on various stigma cases, the Author built up a framework that explains the major variables and their interdependencies. As the result of the research, the new theory describes the change in value caused by the stigma takes place through a filter that combines the distance between the stigmatizing factor and the stigmatized property, the environmental conditions and community perceptions and interprets them differently over time.
Size and value in China Liu, Jianan; Stambaugh, Robert F.; Yuan, Yu
Journal of financial economics,
10/2019, Letnik:
134, Številka:
1
Journal Article
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We construct size and value factors in China. The size factor excludes the smallest 30% of firms, which are companies valued significantly as potential shells in reverse mergers that circumvent tight ...IPO constraints. The value factor is based on the earnings-price ratio, which subsumes the book-to-market ratio in capturing all Chinese value effects. Our three-factor model strongly dominates a model formed by just replicating the Fama and French (1993) procedure in China. Unlike that model, which leaves a 17% annual alpha on the earnings-price factor, our model explains most reported Chinese anomalies, including profitability and volatility anomalies.
Bitcoin is a popular cryptocurrency that records all transactions in a distributed append-only public ledger called blockchain . The security of Bitcoin heavily relies on the incentive-compatible ...proof-of-work (PoW) based distributed consensus protocol, which is run by the network nodes called miners . In exchange for the incentive, the miners are expected to maintain the blockchain honestly. Since its launch in 2009, Bitcoin economy has grown at an enormous rate, and it is now worth about 150 billions of dollars. This exponential growth in the market value of bitcoins motivate adversaries to exploit weaknesses for profit, and researchers to discover new vulnerabilities in the system, propose countermeasures, and predict upcoming trends. In this paper, we present a systematic survey that covers the security and privacy aspects of Bitcoin. We start by giving an overview of the Bitcoin system and its major components along with their functionality and interactions within the system. We review the existing vulnerabilities in Bitcoin and its major underlying technologies such as blockchain and PoW-based consensus protocol. These vulnerabilities lead to the execution of various security threats to the standard functionality of Bitcoin. We then investigate the feasibility and robustness of the state-of-the-art security solutions. Additionally, we discuss the current anonymity considerations in Bitcoin and the privacy-related threats to Bitcoin users along with the analysis of the existing privacy-preserving solutions. Finally, we summarize the critical open challenges, and we suggest directions for future research towards provisioning stringent security and privacy solutions for Bitcoin.
Although recent studies have shown that electricity systems with shares of wind and solar above 80% can be affordable, economists have raised concerns about market integration. Correlated generation ...from variable renewable sources depresses market prices, which can cause wind and solar to cannibalise their own revenues and prevent them from covering their costs from the market. This cannibalisation appears to set limits on the integration of wind and solar, and thus to contradict studies that show that high shares are cost effective. Here we show from theory and with simulation examples how market incentives interact with prices, revenue and costs for renewable electricity systems. The decline in average revenue seen in some recent literature is due to an implicit policy assumption that technologies are forced into the system, whether it be with subsidies or quotas. This decline is mathematically guaranteed regardless of whether the subsidised technology is variable or not. If instead the driving policy is a carbon dioxide cap or tax, wind and solar shares can rise without cannibalising their own market revenue, even at penetrations of wind and solar above 80%. The strong dependence of market value on the policy regime means that market value needs to be used with caution as a measure of market integration. Declining market value is not necessarily a sign of integration problems, but rather a result of policy choices.
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•Decreasing market value (MV) with wind and solar share can be avoided by CO2 pricing.•In long-term equilibria, wind and solar subsidies reduce MV, but CO2 prices do not.•Models with rising CO2 prices draw in wind and solar (VRE) with no reduction in MV.•Falling MV in models with VRE subsidy does not necessarily indicate integration problems.•These results are confirmed using theory and in a power system model.