Islamic equity funds are subject to the screening criteria for stock selection imposed by the principles of Islamic jurisprudence. Equities must pass three basic screens: revenue source, business activity, and financial factors to be included in an Islamic fund. However, screening criteria are not universal especially for the financial factors. One can use financial ratios based on either the book-value of total assets or the market-value of equity for screening of stocks. This may not only result in a different portfolio (...) composition but also entail diverse rebalancing and monitoring costs. The performance of 29 Islamic equity indices versus conventional indices from four major international index providers using different Shari’ah screening criteria are analyzed in a single as well as in a multi-equation framework. The use of a multi-equation framework has the added advantage of utilizing the information content of different screening criteria adopted by different index providers. The empirical findings suggest that the difference in screening criteria does not significantly affect the performance of IEIs. Returns deviation, if any, stems from the relative riskiness of the IEI as compared with the relevant benchmark. Work needs to done to streamline the quantitative screening criteria to avoid confusion among the investing public. (shrink)

Standard models of portfolio investment rely on various statistical measures of dispersion. Such measures favor returns smoothed over all states of the world and penalize abnormally low as well as abnormally high returns. A model of portfolio investment based on the tradeoff between expected return and expected loss considers only abnormally low returns as undesirable. Such a model has a comparative advantage over other existing models in that a first-order stochastically dominant portfolio always has a higher expected (...) return and a lower expected loss. Expected return—expected loss model of portfolio investment can rationalize the equity premium puzzle. Two random variables are not comoving if there is at least one state of the world in which one random variable yields a positive return and the other—a negative return. Such random variables provide hedging benefits from diversification in portfolio investment according to the expected return—expected loss model. A special case of this model, when an investor linearly trade-offs expected returns and expected losses, is also a special case of the prospect theory when a decision-maker has a piece-wise linear value function without any probability weighting. (shrink)

The purpose of this article is to examine empirically the impact of environmental certification on firm financial performance (FP). The main question is whether there is a "green premium" for certified firms, and, if so, for what kind of certification. We analyze the short-run and the long-run stock price performance using an event-study methodology on a sample of Canadian and U.S. firms. The results of short-run event abnormal returns indicate that forest certification does not have any significant impact (...) on firm FP regardless of the certification system carried out by firms. Unlike the short-run results, the long-run post-event abnormal returns suggest that forest certification has, on average, a negative impact on firm FP. However, the impact of forest certification on firm FP depends on who grants the certification, since only industry-led certification (Sustainable Forestry Initiative, Canadian Standards Association and ISO14001) are penalized by financial markets, whereas non-governmental organizations—led Forest Stewardship Council certification is not. (shrink)

There are two types of stock price manipulation examined in the theoretical literature: insider trading, which involves private information that is true and the public spreading of fraudulent false information. While there is a large empirical literature on insider trading, this is the first empirical article to examine the impact of false, fraudulent public information on stock prices and trading volume. We find that such false information, even after being denied by a credible source such as the SEC, generates both (...) abnormal returns and abnormal trading volume. We also find that the effects of the false information on security returns and volume can be persistent for at least 2 weeks. In addition, we show that perpetrators of false news attacks can make potentially large profits from such market manipulations. (shrink)

Corporate social irresponsibility (CSI) and other questionable business incidents that appear to harm stakeholders frequently afflict firms yet draw disparate investor reactions. We address this disparity by investigating the association between firm legal orientation and investor reactions to CSI. We hypothesize the proportion of board members and top management team (TMT) executives with law degrees affects investor perceptions of firm foresight, and in turn, their judgment of blame and consequent punishment. Based on abnormal returns to 629 announcements of (...) CSI and 308 publicly traded S&P 500 firms, we find that both too small and too large a proportion of board of directors and TMT members with law degrees lead investors to mete out harsher punishment. This inverted u‐shaped link is further affected by firm size, firm risk, and industry competition. Our investigation sheds light on the link between executive education and financial performance in the context of CSI and investor perceptions of foresight. (shrink)

This study investigates the market reaction to corporate press releases announcing donations to the relief effort following the December, 2004 tsunami in Southeast Asia. Based on a sample of 79 U.S. companies, results indicate a statistically significant positive 5-day cumulative abnormal return. While differences in the timing of the press releases do not appear to have influenced market reactions, the amount of the donations did. Overall, the results appear to support Godfrey’s (Academy of Management Review 30, 777–798; 2005) assertion (...) that philanthropic giving must be perceived as being a genuine manifestation of the firm’s underlying social responsiveness in order to increase firm value. (shrink)

This article examines whether and how the participation of women in the firm’s board of directors and senior management enhances financial performance. We use the Fama and French (1992, 1993) valuation framework to take the level of risk into consideration, when comparing firm performances, whereas previous studies used either raw stock returns or accounting ratios. Our results indicate that firms operating in complex environments do generate positive and significant abnormal returns when they have a high proportion of (...) women officers. Although the participation of women as directors does not seem to make a difference in this regard, firms with a high proportion of women in both their management and governance systems generate enough value to keep up with normal stock-market returns. These findings tend to support the policies currently being discussed or implemented in some countries and organizations to foster the advancement of women in business. (shrink)

This article provides empirical results indicating that acting in a socially respon- sible and lawful manner is a necessary, though not sufficient, condition for increasing shareholder wealth. It meta-analyzes 27 event studies that have mea- sured the stock market's reaction to incidences of socially irresponsible and illicit behavior. It finds that for firms engaging in socially irresponsible and illicit behavior, the effect on shareholder wealth is negative (wealth decreases), statisti- cally significant (p <.001), and so substantial in size (D = (...) -.932) that the distribution of abnormal returns is shifted nearly a full standard deviation to the left (i.e., negatively) from their expected standard normal distribution. This result gives rationally self-interested firms a self-interested reason to act in a socially responsible and law-abiding manner. It also provides support for a moral position called enlightened self-interest, which prescribes that firms should act in a socially responsible manner to promote the shareholders' interests. (shrink)

In China, many firms advertise that they follow environmentally friendly practices to cover their true activities, a practice called greenwashing, which can cause the public to doubt the sincerity of greenization messages. In this study, I investigate how the market values greenwashing and further examine whether corporate environmental performance can explain different and asymmetric market reactions to environmentally friendly and unfriendly firms. Using a sample from the Chinese stock market, I provide strong evidence to show that greenwashing is significantly negatively (...) associated with cumulative abnormal returns around the exposure of greenwashing. In addition, corporate environmental performance is significantly positively associated with CAR around the exposure of greenwashing. Furthermore, my findings suggest that corporate environmental performance has two distinct effects on CAR around the exposure of greenwashing: the competitive effect for environmentally friendly firms and the contagious effect for potential environmental wrongdoers, respectively. The results are robust to various sensitivity tests. (shrink)

This study empirically analyses the exclusion of companies from investors’ investment universe due to a company’s business model or due to a company’s violations of international norms. We conduct a time-series analysis of the performance implications of the exclusion decisions of two leading Nordic investors, Norway’s Government Pension Fund-Global and Sweden’s AP-funds. We find that their portfolios of excluded companies do not generate an abnormal return relative to the funds’ benchmark index. While the exclusion portfolios show higher risk than (...) the respective benchmark, this difference is only statistically significant for the case of GPFG. These findings suggest that the exclusion of the companies generally does not harm funds’ performance. We interpret these findings as indicative that with exclusionary screening, as practiced by the sample funds, asset owners can meet the ethical objectives of their beneficiaries without compromising financial returns. (shrink)

This paper examines the impact on firm value created by investor reaction to same day news of corporate social responsibility and corporate social irresponsibility activities. First, using trading volume, the authors establish that the perceived value of moral capital generated by news involving institutional stakeholders is less clear to investors than that of the news involving technical stakeholders. Subsequently, the authors analyze abnormal returns from 565 unique firm events—each comprising at least one positive and one negative stakeholder news (...) item. Using signaling theory, the authors demonstrate that news of the number of CSR activities involving institutional groups counteracts the effects of same day CSiR news in an inverted U-shaped fashion. In contrast, they find that news of the number of CSR activities involving technical groups mitigates the effects of same day CSiR news in a U-shaped fashion. (shrink)

A firm’s social performance can shape the impressions of key stakeholders, such as employees, customers, suppliers, and investors, that influence subsequent decision making and relationships to the firm. To test this notion, we examine how a firm’s public recognition for exemplary social performance can serve as a positive signal of the firm’s business performance to shareholders. We conduct an event study of firms named to Working Mothermagazine’s list of “Most Family- Friendly Companies” for the first time between 1989 and 1994. (...) We find statistically significant, positive, abnormal returns for such firms, in particular for firms whose shares are traded on the NASDAQ stock exchange. (shrink)

Corporate social responsibility reporting is becoming mainstream, yet there is limited research on whether and how CSR reports communicate value relevant information. We examine the effects of CSR report readability and tone on future CSR performance and the market reaction around the release of CSR reports. Using a hand-collected dataset of Fortune 500 companies that published stand-alone CSR reports from 2002 to 2014, we find that 1-year-ahead CSR performance is positively associated with the changes in both CSR report readability and (...) tone, suggesting that more readable text and more optimistic tone in a firm’s CSR report are indicative of better future CSR performance. Furthermore, consistent with the view that CSR reports communicate important value relevant information to the market, we document significant market reactions to report readability and tone around the release of CSR reports. Additional analyses suggest that CSR report readability enhances the association between the abnormal returns and the change in CSR report tone, and that the market reaction to CSR report readability is more pronounced for firms with lower analyst following and higher financial opacity. Taken together, our results substantiate the important roles of CSR report readability and tone in communicating future CSR performance and imparting value relevant information to the market. (shrink)

We use the U.S. Supreme Court’s decision in Citizens United v. Federal Election Commission to assess the reputational risks created by political investment opportunities that allow managers to spend unlimited and potentially undisclosed firm resources on independent political expenditures. This new opportunity raises important ethical questions, as it is difficult, and perhaps impossible, under current law for shareholders to hold managers accountable for this investment choice and the reputational risks it entails. Using firms’ known political activity as a proxy for (...) managers’ likely future use of independent political expenditures, we examine how market participants reacted to Citizens United, conditional on this prior activity and corporate governance attributes related to the concentration of decision rights in senior management and blockholders. The results of our analyses document that firms with both a high level of known political activity and CEO-chairperson of the board duality experienced negative abnormal returns in reaction to Citizens United. In contrast, firms with concentrated ownership experienced positive abnormal returns; however, as known political activity increased, investors discounted the benefits of concentrated ownership. These findings suggest that investors expect this expansion of firms’ political investment opportunities to amplify principal-agent problems inherent in corporate political activity. Additionally, our findings provide evidence for those deliberating the mandatory disclosure of firms’ investments in politics as a means of increasing managerial accountability to both shareholders and the public. (shrink)

This article addresses the question whether companies benefit from their commitment to corporate social responsibility. The authors argue that firms which score high on CSR activities build investor confidence and find evidence that they benefit from lower information asymmetry. The authors measure information asymmetry by insider trading, which is defined as the trading of a company’s shares by corporate insiders who have an information advantage with the aim to reap gains or avoid losses. Using a sample of U.S. firms listed (...) in the MSCI World Index during the period 2004 to 2013 and the firm- and industry-level CSR rating from Global Engagement Service, the authors show that insider transactions in firms with a high score on CSR activities lead to lower abnormal returns. This investigation extends current literature on the business case for CSR by explaining the influence of CSR activities on asymmetric information. (shrink)

This article investigates whether investors consider the reliability of companies’ sustainability information when determining the companies’ market value. Specifically, we examine market reactions (in terms of abnormal returns) to events that increase the reliability of companies’ sustainability information but do not provide markets with additional sustainability information. Controlling for competing effects, we regard companies’ additions to an internationally important sustainability index as such events and consider possible determinants for market reactions. Our results suggest that first, investors take into (...) account the reliability of sustainability information when determining the market value of a company and second, the benefits of increased reliability of sustainability information vary cross-sectionally. More specifically, companies that carry higher risks for investors (e.g., higher systematic investment risk, higher financial leverage, and higher levels of opportunistic management behavior) react more strongly to an increase in the reliability of sustainability information. Finally, we show that the benefits of an increase in the reliability of sustainability information are higher in times of economic uncertainty (e.g., during economic downturns and generally high stock price volatilities). (shrink)

This study investigates the financial effects of additions to and deletions from the most well-known social stock index: the MSCI KLD 400. Our study makes use of the unique setting that index reconstitution provides and allows us to bypass possible issues of endogeneity that commonly plague empirical studies of the link between corporate social and financial performance. By examining not only short-term returns but also trading activity, earnings per share, and long-term performance of stocks that are involved in these (...) events, we bring forward evidence of a ‘social index effect’ where unethical transgressions are penalized more heavily than responsibility is rewarded. We find that the addition of a stock to the index does not lead to material changes in its market price, whereas deletions are accompanied by negative cumulative abnormal returns. Trading volumes for deleted stocks are significantly increased on the event date, while the operational performances of the respective firms deteriorate after their deletion from the social index. (shrink)

Publication date: 28 April 2021 Source: International Letters of Social and Humanistic Sciences Vol. 90 Author: Sarah Kinya Mburugu Listing of a company in the securities exchange has been observed to be followed by underpricing in the first day and long term period of underperformance in terms of pricing in the subsequent days. Consequently, there has been a considerable curiosity from stakeholders, investors and academics to comprehend the assessments of why companies go public and the issues surrounding the short and (...) long-run performance of newly issued equities. Underpricing is necessary to induce uninformed investors to participate in IPO offering when faced with adverse selection from informed investors. This often leads to first day price not reflecting a fair value of the IPO. The objective of the study was to determine the long-run performance IPOs and effects in the Kenyan stock market for the period 2007-2014. A descriptive survey research design was employed in the study. The population of the study encompassed all the 64 listed companies at the NSE as at 2016. The study employed a non-probability purposive sampling technique. Data collected for this study was secondary data obtained from NSE website, NSE price lists and the Central Bank of Kenya website for the period 2007 to 2014. The data obtained was analyzed using Statistical Package for Social Science. Mean Average Buy and Hold Returns, Abnormal Returns and Cumulative Abnormal Returns were used to calculate the performance of the stocks. T-statistic for CAR was computed to the test for its significance. T-test was conducted at 95% confidence level to find if MABHR and CAR were statistically significant after IPOs announcement. (shrink)

In this paper, we examine the information content of insider transactions in China and analyze how ownership structures shape market reaction to these transactions. We find that the cumulative abnormal return to insider purchases is a convex function of the percentage of shares owned by the largest shareholder. Further, the CAR to insider purchases is lower when the largest shareholder is government-related, or when the control rights of the largest shareholder exceed its cash flow rights. We also find that (...) the market reaction to insider purchases is more positive for firms audited by Big4 auditors. However, we do not find a significant relationship between an ownership structure and the market reaction to insider sales. Our results are remarkably robust to alternative model specifications, corporate insider identities, and recent corporate news releases on price-sensitive events. Finally, we show that market reaction to insider purchases is larger for firms with less severe expropriations, as captured by the use of other receivables. (shrink)

Companies that have joined the United Nations Global Compact are required to submit a Communication on Progress, which is an environmental, social, and governance report, to the UNGC every year. If they fail to do so, they are marked and listed as non-communicating on the UNGC website. Using the event study methodology, this study shows that a company that fails to report to the UNGC is penalized in the financial markets with an average cumulative abnormal return of −1.6% over (...) a period of 5 trading days around the event. Although a major critique against the UNGC is that the initiative’s voluntary nature and its lack of external monitoring and sanction mechanisms render it ineffective in terms of the business participants’ implementation of the UNGC principles into their operations, this result suggests that investors may be able to pressure UNGC business participants to increase their compliance with the UNGC requirements and to “walk the talk.”. (shrink)

In recent studies, numerous anomalies against the weak and semi-strong-forms of efficient market hypothesis have been found insignificant after controlling the small-firm effect. We investigate whether the insider trading anomaly, a major anomaly against the strong-form of EMH, can survive after excluding small firms with a novel data set and document several new findings. We find a substantially larger number of insider purchases than sales, while the average volume of insider sales is much higher than the average volume of insider (...) purchases. Echoing recent US studies, we find that insider sales generate more abnormal returns than insider purchases do. We find much lower abnormal returns from insider trading than documented in the literature and the associated trading costs, which suggests that the market efficiency of individual stocks may depend on their sizes, and even the strong-form of EMH holds to a larger extent than previously recognized. (shrink)

We investigate an approach to improving statistical text classification by combining machine learners with an ontology-based identification of domain-specific topic categories. We apply this approach to ad hoc disclosures by public companies. This form of obligatory publicity concerns all information that might affect the stock price; relevant topic categories are governed by stringent regulations. Our goal is to classify disclosures according to their effect on stock prices (negative, neutral, positive). In the study reported here, we combine natural language parsing with (...) a formal background ontology to recognize disclosures concerning particular topics from a prescribed list. The semantic analysis identifies some of these topics with reasonable accuracy. We then demonstrate that machine learners benefit from the additional ontology-based information when predicting the cumulative abnormal return attributed to the disclosure at hand. (shrink)

Using an international sample of environmental and social firm-level ratings between 2007 and 2019, we form synthetic overlapping region-based equity portfolios to examine the impact of screening stringency on abnormal returns and specific risk. While previous literature analyzes this relationship in a bidimensional setting, inferences made in this study are additionally robust to regional levels of market efficiency. Our results suggest that (1) screening stringency displays an inverted curvilinear relationship with risk-adjusted returns and (2) the impact on (...) specific risk is strictly increasing. Thus, portfolios that employ marginal and substantial screening incur the cost of responsible investing. However, moderate screening has the benefit of increasing performance without the burden of financing the least responsible corporations. (shrink)

Using an event-study framework, we examine the stock market reaction to the announcement of firm withdrawal from countries designated as “State Sponsors of Terrorism” by the U.S. Department of State. We find that such announcements are, on average, linked to a statistically significant increase in firm value—an effect which already kicks in a few days before the announcement date. The observed abnormal returns are positively associated with the U.S. domicile, the intensity of a firm’s hitherto existing engagement in (...) a designated country, the number of countries that it withdraws from, as well as with a withdrawal from Iran compared to a withdrawal from other countries. Evidence suggests an increase in demand for stocks of withdrawing firms as a plausible cause of the positive stock price reaction. Pension and endowment funds are significantly less likely to own strategic stakes in firms with intensive involvements in countries designated as “State Sponsors of Terrorism.” We find some statistical evidence that firms remaining active in such countries have abnormally positive returns in the long run. (shrink)

We study the impact of COVID-19 on Chinese stock market which can be seen as a complex system. We use the event study method to evaluate its performance change in terms of the return rate, turnover rate, etc. We show that the abnormal return of stock market was significantly negative after the outbreak of COVID-19 and did not turn positive until May 2020. Moreover, the five-factor model is used to estimate the ordinary returns of different industries and show (...) that abnormal returns for medical and food industries were significantly positive, while energy and public utility industries had significantly negative abnormal returns which persisted for a long time. COVID-19 had lag effects on clothes industry, finance industry, transportation industry, and IT industry. We also find that energy and finance industries had negative abnormal turnover rates during the sample period, while other industries, such as healthcare and telecommunications service industries, had positive abnormal turnover rates. (shrink)

The Business Roundtable's “Purpose of a Corporation” letter announced a shift from stockholder primacy to stakeholder primacy. Interestingly, we contend the letter's language employed a technical efficiency emphasis, suggesting a firm's executives chose to make this shift because they believed doing so would improve the firm's financial performance, via improved corporate governance. We examine whether investors actually accepted the technical efficiency arguments at face value, or in contrast believed the announcements were merely a “rational myth,” what management thought investors would (...) want to hear. We employ a 2-day cumulative abnormal return (CAR) event study for 140 publicly-held firms. Overall, we find investor support for the announcement. In addition, we found how returns to firms with prior similar announcements were negative at the time of the announcement. Also, the returns for firms having multiple signatories were positive and significant. (shrink)

Fossil fuel divestment movements have gained momentum since 2011, aimed at ending fossil fuel use and a move toward a cleaner, affordable, and sustainable energy system, for business and society. The present study investigates the direct impact of fossil fuel divestment announcements on stock prices of firms listed on the United States' stock exchanges. Using an event study and guided by the United Nation's sustainable development goals (SDGs), we test the effects of 116 divestments announcements between 2014 and 2019 on (...) 51 publicly traded fossil fuel companies. Our results suggest that there is a negative effect of these announcements on fossil fuel firm stock prices. Also, we find that the type of fossil fuel firm (coal or oil and gas), the type of divestment (partial, coal only, or full), the timing of the announcement, and the size of the divesting investor have some explanatory power in relation to the (cumulative) abnormal returns following the divestment announcements. While the negative impact on stock prices is not surprising, the reaction from the divested firms after such large divestitures is not consistent with what may be expected, given past reactions to divestitures seeking to achieve different social goals. Given the SDGs, it seems clear why investors are divesting themselves from fossil fuel firms, but why has the reaction to the 116 divestments led to very little change in the way these publicly traded fossil fuel firms do business given their direct and growing impacts on society? We conclude the study with some suggestions for future research. (shrink)

The conventional wisdom is that any trading scheme that is not for investment purposes but, rather, for the purpose of inflating or deflating the market price, namely, manipulation, is fraudulent. This paper treats manipulation as a form of communication between the manipulator and the market. As with any communication, it may sometimes be fraudulent, but often it is based on the manipulator’s knowledge, or genuine belief, that a certain stock is being traded at a discount. Under the assumptions of the (...) CAPM, such an informed party should use this information to trade for investment purposes only, but liquidity and risk constraints, which are ignored by the CAPM, often do not allow him to invest; instead these constraints force him to bid the market up. The manipulator’s effect on the market arouses analyst attention and induces the market to update its evaluation of the firm’s value. The more liquid the market, the faster the market updates its evaluation of the firm’s value, and thus the greater the value to the manipulator if his scheme is based on information. I support this theoretical claim with an empirical study of stock manipulation indictments brought by the Israeli Securities Agency during the last decade. The study treats each indictment as a competition between two rival analysts: the Agency, which recommends a “hold” at the pre-manipulation price and a “sell” at the post-manipulation price, and the manipulator, who recommends a “buy” at the pre-manipulation price and a “hold” at the post-manipulation price. Examining the long-run performance of the forty-five stocks that were the subjects of the indictments, I find that investors could gain by following the advice of the Agency. However, the long-run performance of the twenty-two most liquid stocks shows that these stocks experienced a significant positive abnormal return. This finding provides support for my claim that information is a driving force behind many manipulative schemes, especially those that are conducted in liquid markets. (shrink)

Ensuring access to clean water is one of the most important development and health challenges of the twenty-first century. Given the manifold impacts of business activities on water resources, corporate water actions should be of central concern to business ethics researchers. Yet so far we know too little about whether business activities that impact on water resources are noticed or how corporate water actions are valued by a firm’s stakeholders, including by financial markets. In response, we conduct an event study (...) to investigate the shareholder wealth effect of reports of corporate water actions. We explore stock market reactions to water actions by S&P 500 firms from 2005 to 2017, showing that the market reacts positively to reports of responsible water actions and negatively to irresponsible actions. We further explain that these abnormal returns to water actions are associated with a firm’s past performance on ethical issues, arguing that the reputational effects from prior corporate social responsibility and irresponsibility influence market reactions. Our analysis provides evidence that there are diminishing marginal returns to responsible water actions for firms with records of past responsibility and an offsetting effect for those with past irresponsibility. Similarly, we demonstrate an insurance effect that limits punishment for irresponsible water actions for firms with responsible performance records and diminishing negative marginal returns for those already seen to be irresponsible. This study is the first to show that shareholders recognize market value in corporate water actions and are prepared to award or punish firms in stock markets based on their impacts on water. (shrink)

Based on the event study method, this paper conducts the analysis on the short-term performance of 1302 major mergers and acquisitions in China from 2006 to 2019 and takes the cumulative abnormal return as the measurement index. After comparing the five abnormal return calculation models, it is found that the commonly used market model method and the market adjustment method have statistical defects while the Elman feedback neural network model is capable of good nonlinear prediction ability. The study (...) shows that M&A can create considerable short-term performance for Chinese listed company shareholders. The CAR in window period reached 14.45% with a downward trend, which is the win-win result achieved through the cooperation between multiple parties and individuals driven by their respective rights and interests in the current macro-microeconomic environment in China. (shrink)

Recent research suggests that philanthropy’s value to the firm is largely mediated by contextual factors such as managers’ assumed motives for charity. Our article extends this contingency perspective using a “sensegiving” lens, by which external actors’ interpretations of organizational actions may be influenced by the way in which the organization communicates about those actions. We consider how sensegiving features in philanthropy-related press releases affect whether investors value those donation decisions. For the empirical investigation in this study, we analyze abnormal (...) returns to announcements by U.S. Fortune 500 firms documenting their donations to Hurricane Katrina disaster relief in 2005. We expect that in general, donation decisions would be controversial given the uncertainty surrounding the hurricane’s economic effects at the time. However, we also propose that announcements emphasizing employee involvement in the donation send investors positive signals about the firm’s ability to bounce back from the disaster’s adverse effects. We find empirical support for the proposed hypotheses, and discuss the implications for theory and practice. (shrink)

The stock market’s reaction to information disclosure of environmental violation events (EVEs) is investigated multi-dimensionally for Chinese listed companies, including variables such as pollution types, information disclosure sources, information disclosure levels, modernization levels of the region where the company locates, ultimate ownership of the company, and ownership held by the largest shareholder. Using the method of event study, daily abnormal return (AR) and accumulative abnormal return (CAR) are calculated under different event window for examining the extent to which (...) the stock market responds to the EVEs. Furthermore, statistical significance of the difference in stock market reaction is compared between event firms with different characteristics. The relationship between CAR and its impact factors is examined by multivariate analysis. The findings reveal that the average reduction in market value is estimated to be much lower than the estimated changes in market value for similar events in other countries, demonstrating that the negative environmental events of Chinese listed companies currently have weak impact on the stock market. (shrink)

Corporate-level environmental information disclosure is increasingly common. This article studies the impact of a prominent media-generated sustainability ratings program, Newsweek’s 2009 ranking of the 500 largest U.S. firms. Using an event study methodology, the authors find the rankings had a significant impact on shareholder value. Firms in the top 100 experienced abnormal returns after the information release that were 0.6%–1.0% higher than returns of firms in the bottom 400. The form of the information released had significant effects (...) as well. Nuanced environmental score variables had no independent impact on market outcomes; only the final ranking mattered. This article also explores possible channels through which the rankings may have had their impact. The authors find suggestive evidence that private and public politics mechanisms were the most important. (shrink)

This thesis develops a novel framework for explaining delusions. In Chapter 1, I introduce the two fundamental challenges posed by delusions: the evidence challenge lies in explaining the flagrant ways delusions flout evidence; and the specificity challenge lies in explaining the fact that patients’ delusions are often about a few specific themes, and patients rarely have a wide range of delusional or odd beliefs. In Chapter 2, I discuss the strengths and weaknesses of current theories of delusions, which typically appeal (...) to one or both of two factors: anomalous experience and reasoning abnormality. I argue that anomalous experience can help explain the specificity of delusions, but has difficulties in addressing the evidence challenge; reasoning abnormality can help address the evidence challenge, but has difficulties in explaining the specificity of delusions. This suggests that there may be an important factor that has not been captured by current theories of delusions. To search for this missing factor, in Chapter 3, I turn to normal believing. Inspired by the literature on Cartesian clarity and phenomenal dogmatism, I develop a dual-force framework of believing, according to which beliefs can be understood as the results of the interaction between the justificatory force and causal force of evidence and the justificatory force and causal force of clear experience, in which something clearly seems to be so to the subject. This framework suggests that the missing factor may be the clear experience with its distinctive phenomenal clarity that compels assent. In Chapter 4, I return to delusions, and argue that the dualforce framework can help us to get a better grip on some personal descriptions of delusions; make progress in addressing the evidence and specificity challenges of delusions; and shed new light on the underpinnings of delusions. In the end, I conclude with some remaining questions for future study. (shrink)

As proposed for the emergence of modern languages, we argue that modern uses of languages (pragmatics) also evolved gradually in our species under the effects of human self‐domestication, with three key aspects involved in a complex feedback loop: (a) a reduction in reactive aggression, (b) the sophistication of language structure (with emerging grammars initially facilitating the transition from physical aggression to verbal aggression); and (c) the potentiation of pragmatic principles governing conversation, including, but not limited to, turn‐taking and inferential abilities. (...) Our core hypothesis is that the reduction in reactive aggression, one of the key factors in self‐domestication processes, enabled us to fully exploit our cognitive and interactional potential as applied to linguistic exchanges, and ultimately to evolve a specific form of communication governed by persuasive reciprocity—a trait of human conversation characterized by both competition and cooperation. In turn, both early crude forms of language, well suited for verbal aggression/insult, and later more sophisticated forms of language, well suited for persuasive reciprocity, significantly contributed to the resolution and reduction of (physical) aggression, thus having a return effect on the self‐domestication processes. Supporting evidence for our proposal, as well as grounds for further testing, comes mainly from the consideration of cognitive disorders, which typically simultaneously present abnormal features of self‐domestication (including aggressive behavior) and problems with pragmatics and social functioning. While various approaches to language evolution typically reduce it to a single factor, our approach considers language evolution as a multifactorial process, with each player acting upon the other, engaging in an intense mutually reinforcing feedback loop. Moreover, we see language evolution as a gradual process, continuous with the pre‐linguistic cognitive abilities, which were engaged in a positive feedback loop with linguistic innovations, and where gene‐culture co‐evolution and cultural niche construction were the main driving forces. (shrink)

This study investigates how social capital affects managers’ use of corporate resources. We find that for firms located in U.S. counties with a high level of social capital, (i) corporate cash holdings have higher marginal value, (ii) the contribution of capital expenditures to shareholder value is higher, and (iii) acquirers experience higher announcement-period abnormal stock returns. We further find that social capital decreases both over- and under-investment, and thus improves ex post corporate investment efficiency. Our evidence suggests that (...) in communities with a high level of social capital, strong social norms and dense social networks constrain unethical corporate behavior, which induces more efficient use of corporate resources. (shrink)

In this article, we propose that giving in cash and non-cash differ in their relation with the giving firm’s future corporate financial performance and only cash giving is associated with future CFP. Using a novel dataset from ASSET4 that differentiates corporate giving over a sample period of 2002–2012, we examine three competing hypotheses: agency cost hypothesis that cash giving reflects agency cost and destroys value for shareholders, investment hypothesis that cash giving is an investment by management that aims for better (...) future return, and information hypothesis that cash giving has informational value to shareholders as cash is a critical resource at a firm and giving is a decision by managers who are insiders. We find that indeed, only cash giving is positively associated with future CFP and firm value, measured by Fama–French five-factor abnormal risk-adjusted stock returns, future return on assets, and Tobin’s Q. In addition, we find that the positive association exists only between excess, i.e., unexpected, but not expected cash giving and future CFP. Our empirical findings support the information hypothesis, but neither the agency hypothesis nor the investment hypothesis, and are robust to a number of endogeneity tests, including orthogonalized cash giving, instrumental variable regression using geography-based instruments, and propensity score matching. Furthermore, we show that the positive association between future CFP and unexpected cash giving is only pronounced at firms with good governance and relatively higher sales growth where agency problems are less likely, and at firms with no alternative mechanisms to demonstrate the strength of cash flow. Additionally, we do not find evidence that suggests in-kind giving to possess any informational value. (shrink)

The authors explore the relation between the way different family firms are named, and the shareholder value impact of these firms’ new product introductions. Using an event study of 1,294 product introduction announcements of 107 publicly listed U.S. family firms, the authors find that the presence of the founding family’s name as part of a family firm’s name acts as a valuable firm resource, increasing the abnormal stock returns surrounding the firm’s new product introductions. Superior returns to (...) family-named firms’ new product introductions are partially mediated by these firms’ history of ethical product-related behavior: family-named firms, particularly those with corporate branding, and those wherein a founding family member holds the CEO or chairman position, are more likely to exhibit a history of avoiding such product-related controversies as product safety issues, and deceptive advertising. The authors highlight the managerial and theoretical contributions of this research. (shrink)

Drawing on ethical principles of fairness and integrative social contracts theory, moral obligations of fair dealing exist between the firm and all shareholders. This study investigates empirically whether privileged investors of publicly traded firms engage in legal, but morally questionable, trading that at the expense of non-privileged institutional or atomistic investors. In this context, we define privilege as the access to material, nonpublic earnings surprise information. Our results show that the opportunity for procedural unfairness increases with the presence of privileged (...) investors. However, this procedural unfairness does not appear to lead to distributive unfairness even though the level of abnormal trading also increases with the presence of privileged investors. That is, our findings suggest that other shareholders are in fact better off from an outcome perspective given that the abnormal stock price returns upon the announcement of an earnings surprise are either more positive or less negative when the firm has a high proportion of privileged investors. We extract the important implications of our study for future research on the fairness of capital markets and information asymmetry amongst classes of investors, as well as for public policy. (shrink)

In lieu of an abstract, here is a brief excerpt of the content:Invisible HarmKimberly ZieselmanI’m a 48–year–old intersex woman born with Androgen Insensitivity Syndrome (AIS) writing to share my personal experience as a patient affected by a Difference of Sex Development (DSD). Although I appear to be a DSD patient “success story”, in fact, I have suffered and am unsatisfied with the way I was treated as a young patient in the 1980’s, and the continued lack of appropriate care for (...) intersex people even today.As the Executive Director of the advocacy organization Advocates for Informed Choice and a board member of the AIS–DSD Support Group since 2012, I have heard doctors reference the “silent happy majority” of DSD patients all too often. They speak [End Page 122] of patients who were treated in childhood and went on to live (seemingly) contented lives. It appears however that doctors have drawn this conclusion from the fact that most of their patients have not returned to complain about their treatment. While there is little evidence to support the success doctors claim, there is quite a bit of evidence that suggests my suffering is the norm rather than the exception.Medical professionals would likely include me in that “silent majority,” only seeing a woman who identifies and appears typically female, graduated law school, married for over twenty years, with adopted children and a successful career. And while I have been fortunate in many ways, I no longer want my voice to be presumed buried within that silent majority. Instead, I am speaking out today to tell my story.My StoryAt age 15 I was diagnosed with amenorrhea and referred to a reproductive oncologist who told my parents I had a partially developed uterus and ovaries that would likely soon become cancerous. We were told my vagina was abnormally short and might require surgery in order to have heterosexual intercourse.Neither my parents nor I was ever told I had AIS and XY chromosomes, or that the gonads being removed were testes, not ovaries. I was told I needed a “full hysterectomy” to prevent cancer and hormone replacement therapy. That summer I spent my 16th birthday recuperating from surgery. I spent the next 25 years living a lie.A lie that has had a profound and harmful impact on me.At some level, I knew I was not being told the whole truth. My parents’ and the doctors’ actions signaled to me something more might be going on. But I was afraid to ask questions; my parents were distressed and I didn’t want to cause them any more pain. Over the years I have wondered just how much my parents knew but withheld from me (albeit with good intentions). I sensed something awful was being hidden from me, and I didn’t know whom I could trust.When I asked my doctor if I could meet someone else with my condition, I was told I was different, that there was “nobody” with my medical condition in the world, that my situation was “very rare.” I was told to get on with my life and not talk about my surgery because it wasn’t important; I was healthy and could adopt if I wanted to become a parent. I was told I must take a hormone pill each day for the rest of my life to stay healthy.But what I heard was, “you are not a real woman: you are a damaged freak, so go out and fake the rest of your life and be sure nobody knows your secret.” So that’s what I did. I was a “good girl” and took my pills, didn’t ask questions and did what the men in white coats asked me to do. There was no support provided for either my parents or me. No social workers, no therapists. Perhaps most shockingly, there was no true informed consent.A few years ago I was diagnosed with post-traumatic stress syndrome caused by anxiety I had been harboring for over two decades about my past surgery and fear of getting cancer. I decided to obtain my medical records from the hospital and discover the truth.Covering several pages of... (shrink)

This paper selected Vanke as the case to study the governance problems of Vanke and the protection of the interests of small and medium shareholders under the situation of equity disputes. At the same time, the study further explored the advantages and disadvantages of the dispersed ownership structure, the long-term impact on the company’s development and the choice of the involved corporate governance methods under the current Chinese capital market conditions. This paper adopted the event research method and selected the (...) period from June 2015 to June 2017 as the observation period to analyze the market performance impact of Vanke in the equity disputes. At the same time, this paper also measured Vanke’s individual stock rate of return and market rate of return, and calculated Vanke’s normal rate of return [E], abnormal rate of return, and cumulative abnormal rate of return during different event windows. Vanke’s shareholding was too dispersed and the stock price had been sluggish for a long time, which had greatly reduced the acquisition difficulty and cost of Baoneng, thus triggering the “barbarian invasion” of Baoneng. In the struggle for control, whether it was Vanke’s anti-takeover measures or China Resources, Baoneng, and Evergrande’s competition for equity, their actions had harmed the interests of small and medium shareholders. The market supervision department was too lenient to supervise and punish the interests of small and medium shareholders, and opportunism made behaviors that infringe on the interests of others more reckless. However, small and medium shareholders cannot actively participate in the company’s management decision-making to safeguard their legitimate rights and interests, which intensifies the violations of all parties in the equity disputes, thus forming a vicious circle. Therefore, the protection of the interests of small and medium shareholders required the joint efforts and consciousness of regulators, small and medium shareholders, and acquirers. (shrink)

Williams (WS) and Down (DS) syndromes are neurodevelopmental disorders with distinct genetic origins and different spatial memory profiles. In real-world spatial memory tasks, where spatial information derived from all sensory modalities is available, individuals with DS demonstrate low-resolution spatial learning capacities consistent with their mental age, whereas individuals with WS are severely impaired. However, because WS is associated with severe visuo-constructive processing deficits, it is unclear whether their impairment is due to abnormal visual processing or whether it reflects an (...) inability to build a cognitive map. Here, we tested whether blindfolded individuals with WS or DS, and typically developing (TD) children with similar mental ages, could use path integration to perform an egocentric homing task and return to a starting point. We then evaluated whether they could take shortcuts and navigate along never-traveled trajectories between four objects while blindfolded, thus demonstrating the ability to build a cognitive map. In the homing task, 96% of TD children, 84% of participants with DS and 44% of participants with WS were able to use path integration to return to their starting point consistently. In the cognitive mapping task, 64% of TD children and 74% of participants with DS were able to take shortcuts and use never-traveled trajectories, the hallmark of cognitive mapping ability. In contrast, only one of eighteen participants with WS demonstrated the ability to build a cognitive map. These findings are consistent with the view that hippocampus-dependent spatial learning is severely impacted in WS, whereas it is relatively preserved in DS. (shrink)

In lieu of an abstract, here is a brief excerpt of the content:Helping a Muslim Family to Make a Life–and–Death Decision for Their Beloved Terminally Ill FatherBahar BastaniI live in a city in the Midwest with a population of around two million people. There are an estimated 2,000 Iranians living in this city, the vast majority of which belong to Shia sect of Islam. [End Page 190] However, the vast majority is also not very religious. Over the past two decades (...) that I have been living in this city, professionally in the capacity of a physician and university faculty at a school of medicine, and socially as one of the community leaders with a particular role in religious matters, I have acquired the trust of my community. Following one of my yearly routine travels to my homeland, Iran, I had just returned to work when I received a phone call from one of the Iranian community members. He informed me that his father was very ill and was hospitalized, and that the physicians had introduced the idea of stopping life support. The family was experiencing a significant emotional, moral and religious dilemma as to whether they could consent to this. I was requested by the patient’s children to help them make the right decision.I requested that the oldest son, who had called me, to ask the three other siblings and their mother to be present at the bedside of the patient that night, so that we could discuss the matters face–to–face. That same night, all requisite family members and myself gathered at the bedside of this 88–year–old husband and father, who had developed multi–organ failure, which commenced with an infection following a heart valve replacement, followed by bacteremia and sepsis. Moreover, the patient was hypotensive, had developed respiratory failure requiring intubation and artificial ventilation, and had also developed hematologic coagulation abnormalities secondary to sepsis. Because of the sepsis, hypotension, and multiple drugs, including antibiotics and vasopressors, his kidneys had also failed, and there was a need to start hemodialysis if his life was to be maintained. After speaking with the intensive care physicians who were taking care of this elderly gentleman, it became clear to me that further care was futile, and there was absolutely no hope for him to recover from his multiple organ failure. I presented all the facts that I had acquired to the family members, and expressed my own viewpoint that I agreed with those physicians and that further care of their beloved, terminally ill husband and father was futile and only extended his dying. My assurances made it easier for the family members, particularly for his four sons who were present, to come to the decision to withdraw life support. After I informed the intensive care physicians of the family’s decision, the patient was heavily sedated with morphine, and the intravenous fluids, antibiotics, vasopressors, and the ventilator machine were all stopped. Over the next several minutes, the patient developed agonal breathing, his blood pressure dropped to zero, and his heart stopped. During the last few minutes of his life, I held the hands of the family members, we all prayed Islamic prayers to bless his soul while departing from his body. The next day, I supported the family with funeral services that included the Islamic prayers for the dead, the ceremonial religious washing of the body of the deceased, and the ceremonial religious burial.The dilemma that this family faced was multi-factorial: (1) the children had spent all of their adult life in America, and were unfamiliar with Islamic end of life and funeral traditions; (2) they had been asked by their father’s physicians to make a decision regarding the withdrawal of life support, which posed a moral and ethical dilemma; (3) they did not know whether it was religiously acceptable to withdraw life support; and (4) they did not know what type of funeral service would be acceptable to the religious beliefs of their deceased father.My presence as a trusted community leader, physician and religious leader was reassuring to the family members that the decision to stop life support for their loved one with a terminal illness and multiple organ... (shrink)

Despite receiving a great deal of research attention, the effect of corporate philanthropy on shareholder value remains inconclusive. To address this issue, the present paper examines emotionality as an important factor based on which investors infer about the firm’s motive as well as the beneficiary’s worthiness and react accordingly. Consistent with attribution theory, our event study shows that announcements with more emotional expressions are associated with higher cumulative abnormal stock returns and the effect is stronger when investor attention (...) is greater. We further find that the positive interaction effect between emotionality and investor attention is more pronounced for scandal-free firms than for firms with corporate social irresponsibility (CSI). The empirical evidence remains consistent under various robustness tests. The paper concludes with implications for future research and managerial practices. (shrink)

For public health professionals, traumatic brain injury and its possible protracted repercussions are a significant source of worry. In opposed to patient neurorehabilitation with developed brain abnormalities of different etiologies, neurorehabilitation of affected persons has several distinct features. The clinical repercussions of the various types of TBI injuries will be discussed in detail in this paper. During severe TBI, the medical course frequently follows a familiar first sequence of coma, accompanied by disordered awareness, followed by agitation and forgetfulness, followed by (...) return of function. Clinicians must be aware of common medical issues that might occur throughout the various stages of neurorehabilitation, for example, posttraumatic hydrocephalus, paroxysmal sympathetic hyperactivity and posttraumatic neuroendocrine disorders, at each step of the process. Furthermore, we address problems about the scheduling of various rehabilitation programs as well as the availability of current data for comprehensive rehabilitative neuropsychology techniques. (shrink)