1,721,005 research outputs found
GHG Emissions and Firm performance: The role of CEO Gender Socialization
Full text linkIn this paper, I examine the effect of corporate greenhouse gas emissions (GHG) on profitability. I use the gender composition of the CEOs' children as an identification strategy to investigate the impact of GHG emissions on profits. CEOs who father a daughter are associated with a 10% reduction in GHG emissions. The reduction in emissions, in turn, improves profitability. A one standard deviation decrease in GHG emissions leads to a 0.14 standard deviations increase in profitability. Examining the channels, I show that CEOs with daughters are more likely to adopt a climate-integrated business strategy and set emission-reduction targets. Emission reduction affects profitability through both information advantage (protection from negative industry shocks, and lower cost of capital), and operational efficiency (lower operating costs and energy consumption) channels
Does threat of dismissal constrain acquisition premium in CEO pay
Full text linkThis paper shows that the likelihood of post-acquisition CEO turnover can act as a constraint on risky acquisition decisions. The acquisition premium in pay decreases by over 50% if the dismissal risk is controlled for. Given a smaller pay premium for undertaking acquisitions and a non-zero risk of dismissal, shareholders are shown to be able to exercise some control over managerial incentives to engage in risky acquisitions through the mechanism for dismissal
Strategic CEO activism in polarized markets
No full textIn this paper we show that statements of US CEOs on contentious social issues are not necessarily an expression of their political views. Republican-donor CEOs are three-times more likely to make social statements with a liberal-slant. CEO activism is more likely if firms' operating environment is politically polarized, and employees are Democrat-leaning. Such statements are associated with a 3% increase in consumer visits to a firm's Democrat county stores without significantly reducing them in Republican counties. CEO activism is associated with a 0.12% gain in firm value, increased quarterly sales, and a reduced likelihood of shareholder activism on social issues
Do social policies foster innovation? Evidence from India's CSR regulation
Full text linkWe examine the effect of social policies on corporate innovation using India's mandatory Corporate Social Responsibility (CSR) regulation. This regulation mandates firms with pre-tax profits above a certain threshold tospend 2 % of the profits on CSR. We demonstrate a significant bunching of companies just below the profitthreshold post-regulation compared to the pre-regulation period. Firms close to the profit threshold manipulatetheir earnings to avoid compliance by increasing their R&D expenses. We show that, on average, firms thatincrease R&D expenses to avoid the regulation apply for one more patent and announce two new products. Theincrease in R&D expenses and patenting is concentrated in firms with a prior history of innovation. Our resultssuggest that social policies can generate indirect incentives for innovation
The role of employer learning and regulatory interventions in mitigating executive gender pay gap
Full text linkThis paper examines the role of information and regulatory interventions in mitigating the executive gender pay gap. We find female executives receive about 34% less compared to equivalent males from the same cohort, which falls by half over tenure within the company, but remains systematically significant throughout. The gender pay gap is the highest for young female executives and in the financial sector. Both demand-side (board gender quotas) and supply-side (family policies) regulatory interventions are associated with a lower gender gap in executive pay. Board gender quotas are associated with lower gender pay gap for experienced female executives in the highest age bracket. In contrast, supply-side interventions are associated with lower gender pay gap for the youngest female executives. Our results have important implications for the relative effectiveness of public policies that aim to reduce gender imbalance in corporate leadership and pay
Supply and demand side determinants of board gender imbalance: the U.S. evidence
No full textWomen are heavily underrepresented in U.S. boardrooms at a time when many countries are introducing policies such as gender quotas to achieve greater gender balance in boards. To understand why, we examine how successful women are, relative to men, in finding a second board appointment after an initial appointment. We find that women do better than comparable men in terms of the quality, likelihood, and speed of the second appointment. Examining first appointments, we find that women who obtain board seats generally have significantly less leadership and work experience in quoted firms than men, but (after controlling for observable attributes) are appointed at larger firms. Our findings are consistent with underrepresentation of women being more a consequence of supply side factors: in particular, a lack of opportunities for women to rise up the corporate ladder, so that only a small number of exceptionally capable women manage to be on the radar of nomination committees. We find little evidence that boards engage in either taste-based or statistical discrimination against women
Stakeholder Preference and Strategic Corporate Social Responsibility
Full text linkThis paper investigates the role of stakeholder preference on corporate social responsibility (CSR) strategies. Using a staggered difference-in-difference approach, we show that Indian firms increase CSR expenses when trade restrictions (Antidumping) are initiated against competing Chinese exports from countries with a high stakeholder preference for CSR. However, when these shocks emanate from countries with a lower stakeholder preference, CSR expenses re-main unchanged. Capital expenditure and R&D of Indian firms increase following AD shocks, irrespective of their country of origin. Finally, CSR increases firm value only when the demand shocks originate from countries with a higher CSR preference. Collectively, we provide evidence for consumer-driven CSR strategies
Risk contingencies in the reconfiguration of global value chains
No full textWe examine how firms reconfigure global supply chains in response to two forms of risk :internal risk, reflecting firm-level perceptions of political and strategic uncertainty, and external risk, arising from major exogenous shocks. Using a global firm-level panel combining FactSet supplier data with textual risk measures from earnings calls, we analyze adjustments in hori-zontal complexity (number of suppliers) and spatial complexity (geographic dispersion). Firms facing higher internal risk tend to simplify their networks, reducing suppliers and sourcing more regionally, while firms exposed to external shocks—such as the 2011 Japan tsunami,2017 U.S. tariffs, 2018 U.S.–China trade war, and 2020 Brexit—diversify across suppliers and geographies. Internal risk moderates these adjustments, dampening diversification after shocks. The findings reveal that supply chain reconfiguration reflects a micro-level trade-off between efficiency and security, offering new insight into how firms balance coordination costs and resilience in uncertain global environments
Learning-driven prospect and household risk mitigation strategy under uncertain climate risks: a dynamic cumulative prospect theory approach
No full textHow do households perceive and value the growing risks of climate change (such as floods, fires, and windstorms) in their willingness to pay a certain housing insurance premium? Does (the speed of) learning about the (in)frequency of climate-related risks shape households’ decisions to endogenize it in their future premium decisions? In this paper, we introduce the role of learning in the characterisation of a prospect function of a household. Because households invariably make decisions under uncertainty, how certain risks (such as the probability of climate-related risks) develop over time, a class of households may see their urgencies differently from others. Through a learning-based approach, we formalize an agent-based decision, particularly a cumulative prospect in a dynamic setting. This setting allows households to categorise risks (as high, low, and medium) and accordingly, as risks evolve and move to a different epoch, households’ learning-driven memory shapes their cumulative prospects. We characterise households’ decision problems in a dynamic cumulative prospect theoretic framework and show how they can derive optimal insurance premiums under heterogeneous climate risks. Simulation results present various predictive scenarios of the evolving nature of climate risks and associated insurance objectives. Our results offer valuable insights into the role of learning in designing optimal insurance, considering the demand of consumers’ risk functions
Managerial incentives and strategic choices of firms with different ownership structures
Full text linkWe examine how ownership structure affects managerial incentive alignment mechanisms and strategic objectives. We compare large Indian firms with dispersed equity ownership with business-group affiliates operating within the same institutional frameworks. We find that the performance sensitivity of CEO pay and turnover differ significantly across group affiliates and stand-alone firms. The strategic choices of firms also differ in response to managerial incentives. However, we find that, regardless of those differences, firm performance is similar for both types of firms. Overall, this paper suggests that ownership structure and managerial incentives can adjust to optimize strategic choices and firm performance. (C) 2017 Elsevier B.V. All rights reserve
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