Divergent Interests Research Articles

Double Materiality Approach and Sustainable Business Model Paradigm: A Three-Fold Analysis

Adopting the United Nations 2030 Agenda for Sustainable Development, governments commit to the 17 goals and 169 associated targets in areas of critical importance for humanity and planet, while companies manifest a growing interest in playing a significant role to SDGs prioritisation. Researchers, policymakers, stakeholders, and analysts are all preoccupied about responsible ways of redesigning the business model to mitigate the growing concerns, such as companies’ failures, global multidimensional crisis, and sustainability-related issues. Under the light of institutional theory, legitimacy theory, stakeholder theory, the aim of this research is to investigate how environmental, social and governance (ESG) policies and practices included in a sustainable business model may respond to the double materiality approach in order to contribute to a balance among divergent interests of managers, investors, and other stakeholders. The financial materiality is conceptualized using ESG data, that mainly targets investor’s needs. Stakeholder materiality, is concerned with external impact of companies, embodied in societal-level outcomes measured as the number of SDGs addressed in corporate reporting. In this study, company-year data are collected from Refinitiv Eikon database, starting with 2015, until current reporting period and analysed using frequency, univariate and correlation analyses. Based on Levene homogeneity, the ANOVA parametric t-test results are validated by Mann-Whitney Wilcoxon and Krushkal Wallis non-parametric tests. Three main research questions are responded. First, the findings examine and discuss the evolution of sustainability reporting measured with ESG scores, decomposed by the three pillars and ten categories, along with the SDGs prioritisation. Second, statistically significant differences in ESG and SDGs variables reported by various groups clustered on industry-related corporate characteristics are discussed. Third, the significant associations between ESG measures and SDGs are analysed from the double materiality perspective. The study contributes to the academic and practical understanding of the evolving business model under normative dimension of institutional theory, incorporating the decision to engage in current sustainability frameworks and policies.

Cyclical Inclusive Growth Model of the European Union

This article analyzes the distinctive features of the contemporary cyclical inclusive growth model within the European Union (EU). As an integration entity, the EU contends with a series of internal challenges that impede its development, arising from the divergent economic interests of member states and the uneven distribution of the costs and benefits of the 'twin transition' in the context of Europe’s declining global competitiveness. Exploring the nuances of inclusive growth in the EU, particularly the role of citizen participation in societal progress, offers a valuable framework for understanding the social and economic contradictions both within and between member states. The study commences with a critical review of existing definitions of inclusive growth, laying the groundwork for an in-depth analysis of the EU model.The research employs quantitative methods to compare EU member states using the UNCTAD Inclusive Growth Index and additional indicators of social and economic development and well-being. It also evaluates the outcomes of the 'Europe 2020' strategy, which aimed to establish inclusive growth targets for the EU by 2020. The findings reveal that the highest levels of inclusive growth are concentrated in northern and continental European countries, whereas Central and Eastern Europe (CEE) exhibit significantly lower levels. The analysis further uncovers key contradictions, such as the tension between reducing socio-economic inequality and promoting economic growth, the generational conflict over the ‘green economy,’ and the misalignment of interests between smaller and larger EU economies.Despite the initiatives under the 'Europe 2020' strategy, the study observes a shift in the priorities of EU citizens concerning inclusive growth. The research identifies fundamental characteristics of the EU's inclusive growth model, marked by a cycle of emerging and resolving social and economic contradictions at the Union level. A notable aspect of this model is the increasing complexity and multiplicity of contradictions, alongside a growing emphasis on subjective well-being and the fulfillment of intangible individual needs. The insights derived from this analysis have practical implications for developing inclusive growth support measures within the Eurasian Economic Union (EAEU) and can aid in defining priorities and mechanisms for the social and economic policies of EAEU member states.

Analysing the role of stakeholder engagement in determining the effectiveness of communication and public relations strategies: ghana highway authority in perspective

This research paper examines the importance of stakeholder engagement in shaping effective communication and public relations strategies, specifically focusing on the Ghana Highway Authority (GHA). The study reveals that most participants are well-educated and relatively young, with a significant proportion affiliating with the GHA, adding credibility to the findings. The investigation finds that most participants rate the GHA's communication and public relations strategies as good, with some even deeming them excellent. However, the study also identifies areas that need improvement, such as enhancing interactions with citizens and refining messaging techniques. The study also uncovers significant challenges that hinder stakeholder engagement within the GHA, including inadequate communication channels and a lack of trust. These results support previous research that emphasises the crucial importance of trust in successful engagement with stakeholders. The study further emphasises the complexity of reconciling divergent stakeholder interests, which can lead to passionate advocacy and complicated engagement efforts. The paper recommends that to enhance communication and public relations, the GHA should engage stakeholders in the decision-making process and create reliable systems for feedback. By incorporating stakeholder perspectives and insights, the GHA can refine its strategies and better address the needs and concerns of its diverse stakeholder community.

The links between experiential learning and 4E cognition.

In this article, we explore the connections between two distinct approaches: experiential learning (EL) and 4E cognition. EL emphasizes the role of concrete experiences as the building blocks of learning, whereas 4E cognition views cognition as arising from the interactions that an individual has with their physical and social environment. Despite their divergent theoretical frameworks, methodologies, and interests, we argue that both frameworks share a common vision of cognition and that their integration could mutually enhance their respective fields. This article outlines the historical origins and underlying assumptions of both frameworks, highlighting the potential links that can be established between them. Specifically, we explore the significance of embodiment, embeddedness, extended cognition, and enactive processes in learning and cognition. To bridge these frameworks, we propose employing the concept of "concrete experience" as an active engagement of individuals with their physical and social surroundings. By encompassing the essential aspects assigned to concrete experiences in EL, as well as the embodiment, situatedness, extended cognition, and enactive features of 4E cognition, this notion serves as a unifying element. Ultimately, the article suggests that combining the insights from EL and 4E cognition can offer a richer, more holistic understanding of representation.

Critical Vulnerability in Leadership as a Key Factor in Successful Change Management Communication

This research explores the relationship between the discovered phenomenon of critical vulnerability in leadership during organizational change and its successful outcome. The phenomenon under study is fundamentally distinguished from vulnerable leadership, which is covered in literature as a deliberate tactic leaders use to improve interpersonal relationships and performance. This study concentrates on challenging and uncontrollable leader vulnerability manifested as a decline in the authority and influence of the leader among stakeholders. The main reason for the observed critical leader vulnerability is hypothesized to be the gap in leadership mindset levels between the leader and stakeholders at the onset of the organizational change. It is also hypothesized that the change communication of an authentic leader, predetermined by a high level of leadership mindset, triggers the leader's vulnerability and, at the same time, paradoxically contributes to the evolution of stakeholders' leadership mindset. This, in turn, is a prerequisite for achieving remarkable prosocial results. Relying on the described assumptions, we executed preliminary research, aiming to identify the change communication patterns of leaders in the state of vulnerability (hereinafter referred to as "vulnerable change communication") and to explore how they catalyze the stakeholder mindset evolution. The final sample group involved 9 top managers who faced vulnerability while leading the change process and made significant contributions to the development of their organizations. The research methodology relied on qualitative methods—in-depth interviews on which narrative and thematic analysis was based. Leaders were asked questions to discover goals of change, the presence of periods of vulnerability, the causes and consequences of its occurrence, their communication patterns, and results achieved. The obtained data were analyzed by applying recognized frameworks such as the Michigan Model of Leadership with its Competing Values Framework (CVF), the Approach of Management of Organizational Change Paradoxes, Programmed and Adaptive Approaches to Change, and Stakeholder Communication Model of Change. The present study has taken the first steps towards confirming the existence of an unambiguous connection between certain patterns of leadership change communication, embracing vulnerability by leaders, and remarkable prosocial outcomes. We found that change communication strategy based on embracing personal vulnerability and a high level of leadership mindset characterized by a value-based position, commitment to outstanding prosocial results, and synthetic decision-making ensures the leader the following: 1) Construction of Shared Leadership. The leader creates an organizational culture that transforms stakeholder resistance based on self and group interests into the evolution of a stakeholder leadership mindset and consolidation of the company. The formula for combining the best of both programmed and adaptive approaches to change includes preserving the integrity of the vision and managing meaning and outcome on the one hand, and supporting the strategy by the deployment of communication and bottom-up initiative on the other. 2) Managing Organizational Change Paradoxes. The leader addresses institutional contradictions and stakeholder divergent interests that naturally arise during the change process and creates the basis for subsequent institutionalization on a much stronger and healthier foundation. The paradoxical effect of a leader's personal vulnerability on organizational vulnerability is that the leader helps to reduce the organization's risks by taking them on themselves. Further exploration of the phenomenon of vulnerability will allow us to consider the inclusion of this component in the framework of change management models, to identify vulnerable leaders, specify the vulnerable communication model of change, and develop a list of recommendations for leaders to more consciously navigate the difficult stage of vulnerability as a systemic and inevitable attribute of achieving remarkable prosocial results.

Negotiating pricing and payment terms for insurance covered mHealth apps: a qualitative content analysis and taxonomy development based on a German experience

BackgroundGermany was the first country worldwide to offer mobile digital health applications (mHealth apps, “DiGA”) on prescription with full cost coverage by statutory health insurances. Especially statutory health insurances criticize the current pricing and payment regulations in Germany due to “free and non-transparent” pricing in the first year and lack of cost use evidence. The study consists of two parts: The first part evaluates interests of digital health application providers and statutory health insurances in Germany to identify overlaps and divergences of interests. The second part includes the development of a comprehensive pricing and payment taxonomy for reimbursable mHealth apps in general.MethodsBoth parts of the study used the input from 16 expert interviews with representatives of digital health application providers and statutory health insurances in Germany. In part one the authors conducted a qualitative content analysis and in part two they followed the taxonomy development process according to Nickerson et al. (2013).ResultsA value based care model is expected to bring the greatest benefit for patients while statutory health insurances welcome the idea of usage based pricing. The final pricing and payment taxonomy consists of four design and negotiation steps (price finding, payment prerequisites, payment modalities, composition of negotiation board).ConclusionsAs healthcare resources are scarce and thus need to be optimally allocated, it is important to implement pricing and payment terms for reimbursable mHealth apps that result in the greatest benefit for patients. To the best of the authors’ knowledge, there has been no structured study yet that examines alternative pricing strategies for reimbursable mHealth apps.The developed pricing and payment taxonomy for reimbursable mHealth apps serves as planning and decision basis for developers, health policy makers and payers internationally.

Managing Conflicting Stakeholder Interests: A Co-Branding Perspective for How Managers Can Mitigate Negative Shareholder Responses to Cause-Related Marketing

ABSTRACT Research suggests that most brand stakeholders react favorably to cause-related marketing (CRM), and CRM positively impacts the brand. However, a divergence of interests can create tension in the principal – agent relationship, as the owners may feel that managers are investing in CRM at the expense of maximizing profits. Along these lines, recent research suggests that shareholders negatively respond to CRM, which reduces shareholder value. Thus, there are concerns about whether expenses incurred via CRM partnerships create value for all stakeholders. Therefore, because CRM can benefit nonprofits and many of the firm’s stakeholders, the authors utilize agency theory and signaling theory to explore co-branding and competitive signals that mitigate the negative impact on shareholder value. The results provide insights into how nonprofit and brand managers can navigate CRM partnerships by designing campaigns that send signals designed to alleviate investor concerns and reduce shareholder disapproval yet still garner support from other stakeholders.

Whose democratization matters? Understanding the effects of regime change on normative changes in ASEAN

AbstractThis article aims to elucidate the varying effects of democratization in ASEAN members on the normative changes in the core principles of the “ASEAN Way.” Utilizing a regional-centric approach that emphasizes ASEAN members’ agency, the article posits that two critical variables shape the changing trajectory of ASEAN norms: ASEAN members' democratic performances and their regional status. While an ASEAN member’s democratic performance influences its willingness to advocate for normative changes, its regional status is also crucial in determining its capability to implement changes by navigating the divergent interests among ASEAN members. Only the ASEAN member with a high-quality democratic performance at home and recognized regional leadership can effectively bring about normative changes to ASEAN norms. Otherwise, either the domestic democratic deficit or a lack of leadership status will hinder the ASEAN members’ efforts to promote normative changes. Using the process-tracing method, the article empirically focuses on the Philippines, Thailand, and Indonesia for comparative case studies. The findings reveal that the Philippines’ poor democratic performance since the democratic restoration in 1986 has hindered its motivation to push for normative changes in ASEAN, rendering the Philippines a reluctant promoter. Although Thailand has made notable achievements in democratic consolidation since the downfall of junta rule in 1992, its lack of regional leadership has greatly limited its capability to reconcile the divergent interests among ASEAN members, resulting in the failure of its “flexible engagement” initiative. Conversely, Indonesia, with a high-quality democratic performance at home and bolstered by its regional leadership status, successfully brought significant changes to ASEAN norms by facilitating the ASEAN Charter signed in 2007.

Approaches towards legal protection for holy places: The example of the Alexander Nevsky Church in the Old City of Jerusalem

Abstract Given the varying degrees of importance that a holy place holds for different parties and the variety of laws used to regulate them, laws pertaining to holy places integrate a broad array of legal, political, social, religious, and economic interests. Acknowledging the difficulty of capturing a singular standard of protection merits examining different existing modalities to discern the means of protection for holy places. A 2022 Israeli District Court case concerning ownership rights over a Russian Orthodox church in the Old City of Jerusalem shall provide the platform for scrutinizing the relevant laws and variety of interests at play for holy places in Israel, providing insights into the importance of accounting for divergent interests in the cultural heritage protection milieu. This article shall highlight the approaches used towards holy place protection in a difficult and complex context, Israel, to better understand heritage protection methods for unique or significant cultural sites in other regions.

Time to Consensus in International Negotiations

Contemporary international relations, anchored in the principles of multipolarity, frequently employ consensus-based decision-making, which prioritizes respect for all negotiating parties and ensures that the views of all participants are considered equally. While consensus remains a core mechanism for many international organizations, such as the World Trade Organization (WTO), it has increasingly come under criticism for its inefficiency and substantial time requirements. This highlights the importance of examining the factors that influence the time needed to reach consensus. Utilizing formal mathematical modeling based on a modified DeGroot model, this article explores how variables such as the size of the negotiating group, the level of authoritativeness, dominance dynamics within the group, and coalition formation affect the time required to achieve consensus. The findings indicate that an increase in group size, on its own, results in only a minor increase in the time needed to reach consensus, becoming a significant factor only when paired with high levels of authoritativeness among the participants. Conversely, the presence of a highly authoritative member within a negotiating group significantly prolongs decision-making time, even in smaller groups, and the formation of coalitions (e.g., due to multiple highly authoritative members) can make reaching consensus impossible. The "consensus minus k" rule, intended to break deadlocks, is found to be ineffective for international organizations with numerous participants and divergent interests. In hierarchical structures, consensus is typically achieved through preliminary negotiations within subgroups, which further prolongs the consensusbuilding process.

Religious, ethnic and regional identities in Nigerian politics: a shared interest theory

ABSTRACT This essay examines the complex interplay between religious, ethnic, and regional identities in Nigerian politics, challenging the idea that religion solely dictates political behavior. It delves into the manipulation of identities for political advantage, with an emphasis on religion. The Social Identity Theory (SIT) is discussed, highlighting the cognitive processes in forming social identities and their role in promoting in-group bias and out-group prejudice. The novel contribution that this essay makes is the introduction of what I termed the ‘Shared Interest Theory’ or the ‘Common Interest Theory,’ arguing that changes in interests, both tangible and intangible, can trigger shifts in social identity and group dynamics. This theory offers a rational framework for understanding social identity dynamics, providing insights for promoting social cohesion in diverse societies. This framework on identity and politics underscores the importance of recognizing and addressing the divergent interests of different groups to mitigate conflicts and foster social harmony.

A profissão de sociólogo-sociologia: Os preceitos teórico-prático, as práticas técnicas e os procedimentos profissionais do conhecimento do mundo humano

In the nineteenth century, with the constitution of the capitalist system, social life coexisted with a situation of crisis and social pathologies that put at risk the very sociability of the political system in evidence. At this time, philosophical and naturalist thinkers and intellectuals considered the need for a field of scientific study that would study the causes and origins of social disturbances and problems: sociology emerges – the science of the direction and orientation of society. Its institutionalization process resulted in the professionalization of the sociologist or social scientist and in the school constitution of vast areas of teaching and research. Today, the training of the sociologist is outdated for the resolution of contemporary problems, mainly due to some theoretical-methodological inconsistencies that have not yet been diagnosed or defined with greater precision and methodical systematicity, such as, for example. the theme of subjectivity that has brought all kinds of forms of erratic perceptions and left social science at the mercy of all kinds of antagonism, oppositions and ambiguities of divergent interests and points of view. With the use of the hypothetical-deductive-inductive method of social science and procedures of methods and techniques of investigation, it was identified that social science was constituted on solid bases of scientific foundations that go back to ancient Greek thought, and as Auguste Comte had announced, when he defined the dimension of the social as an objective unit of sociology, conferring to its objectivity the maximum degree, even going so far as to call sociology – the science of the direction and organization of society – as social physics and social mathematics for its high level of sociological precision of its scientific procedures in line with the interpretations and explanations of the course of events, facts or phenomena of life in society

Navigating chaos: IGAD's efforts Amidst Somalia's Governance crisis

This study investigates how effectively Intergovernmental Authority on Development (IGAD) has addressed the crisis in Somalia since 1991, using realism theory as its analytical framework. It employs a qualitative case study approach to delve into IGAD's interventions and their implications, conducting an in-depth analysis of IGAD's official documents, resolutions, and crisis-related reports concerning Somalia. By applying realism theory, the study scrutinizes IGAD's actions and motivations from a perspective centered on power politics, highlighting the significance of state interests and regional stability. It suggests that IGAD member states may resist to cooperate when they perceive IGAD's engagement in Somalia is regarded as a threat to their security interests. Despite IGAD's numerous peace initiatives, achieving sustainable peace in Somalia remains elusive. The paper asserts that while IGAD has made substantial efforts to resolve the Somalia conflict, its effectiveness has been constrained by the complexity of the conflict, external influences, and divergent interests among member states. To enhance IGAD's effectiveness, the study recommends various actions, including promoting regional economic integration, mobilizing external resources, improving transparency and accountability, fostering regional identity and solidarity, and maintaining a balanced power dynamic to prevent dominance by any single entity. Applying these measures could significantly improve IGAD's capacity to support peace and stability in Somalia and the entire East Africa region.

#SouthAsians4BlackLives: racial positionality in digital allyship and the prospects for cross-racial solidarity for racial justice in the USA

ABSTRACT The presence of multiple racial groups was a key feature of Black Lives Matter (BLM) protests in 2020. This study investigates racial positionalities embedded in expressions of digital allyship with BLM on Instagram by South Asians in the U.S.A. and the prospects for cross-racial solidarity for racial justice. Our computational network analysis of Instagram posts using variations of the hashtag #sa4bl over a six-month period reveals that South Asian activists, influencers and everyday users expressed allyship; however, they formed distinct Instagram communities signalling multiple constructions of allyship. Qualitative analysis indicates two distinct repertoires of allyship; one focussed on consciousness-raising within South Asian communities, and the other on direct expression of allyship with BLM. These repertoires point to the presence of both ethnic and racial positionalities in South Asian digital allyship, reflecting divergent interests based on intersecting identities. Our findings complicate recent evaluations of cross-racial allyship for racial justice amongst South Asian Americans.

The EU’s evolving defence-industrial ambitions

Brussels has set the goal of achieving a more genuine European defence union, but taking a more unified approach to defence issues is a long-term endeavour, with fragmentation in defence procurement and divergent member-state interests serving as significant barriers to further progress. It is likely that, as the European Commission advances its plans, it will need to balance its desire for autonomy with the reality of its ongoing reliance on non-EU suppliers.

Public value judgments about the criteria for reimbursement of medicines in South Korea

ABSTRACT Objectives This study quantified the public value (PV) of the criteria and sub-criteria in the current drug reimbursement systems in South Korea and examined sociodemographic factors that associated with PV. Methods The Analytic Hierarchy Process (AHP) was used to quantify the PVs of criteria and sub-criteria. We developed a questionnaire to generate pairwise comparison matrices among criteria and sub-criteria. From 27 March to 1 April 2023, we recruited 1,000 study participants using a quota sampling method stratified by age, sex, and region based on Korean census data. Results The PVs for the criteria were highest for clinical usefulness (28.5%), followed by cost-effectiveness (27.1%), budget impact (24.3%), and reimbursement in other countries (20.1%). The sociodemographic characteristics of the participants had a significant impact on the PVs of the criteria. Willingness to pay additional premiums for national health insurance was negatively associated with PV for clinical usefulness and cost-effectiveness and positively associated with PV for reimbursement in other countries. Conclusions The public prioritized clinical usefulness and cost-effectiveness as the main criteria. However, the PVs of the criteria were divergent and associated with sociodemographic factors. Divergent public interests require an evidence-informed deliberative process for reimbursement decisions.

Discrepancies in Mate Preferences among Chinese Families between Fathers, Mothers, and Children: A Latent Profile Analysis.

Parents develop their own preferences regarding prospective in-laws, which influence their children's mate selection processes and outcomes. From an evolutionary perspective, fathers, mothers, and their offspring have partially divergent genetic interests, potentially leading to conflicts in mate preferences. Currently, the characteristics of discrepancy profiles in mate preferences within Chinese families and their influencing factors remain unclear. Adopting an individual-centered perspective, this study examined the profiles of discrepancies in mate preferences between fathers, mothers, and children across a diverse set of Chinese families, along with their associations with family relations and evaluations of children. This study recruited 337 complete families. The results revealed three distinct profiles of father-mother mate preference discrepancies in families with sons and four profiles in families with daughters. Additionally, both families with sons and daughters displayed three profiles of discrepancies in parent-child mate preferences. Parental perceptions of marital relationships and their evaluations of children were linked to diverse father-mother discrepancy profiles in both families with sons and daughters. The father-son relationship was associated with the profiles of parent-child discrepancies in families with sons, while maternal evaluations of children and daughters' self-evaluations were related to the profiles of parent-child discrepancies in families with daughters. This study provides insights into understanding the conflict patterns and underlying reasons regarding mate preference between Chinese parents and their children within family settings.

Treading the Narrow Path – Rethinking Democratic Education in Times of Polarization

Abstract This essay examines the relationship between knowledge, politics, and education in the context of the global crisis of democracy and the growing prevalence of political polarization. Focusing on the issue of vaccine hesitancy, I explore how citizens’ reference to knowledge and values shapes their political judgements and argue for the importance of education in facilitating informed and reasoned decision-making. Drawing on Hannah Arendt’s dialectical account of politics and knowledge, I highlight the limitations of reducing political debates to a quest for ‘right knowledge’, arguing that it neglects the coordination of diverse values and interpretations that is essential to democratic processes. To do so, I discuss ‘educationalization’ of the political during the COVID-19 pandemic, wherein the dissemination of empirically grounded information became a strategy to generate public consent. However, my essay cautions against the hegemony of empirical knowledge, which can lead to despotic politics and the proliferation of misinformation. To ensure differentiated and reasonable judgements in uncertain situations and conflicts, I turn to Arendt’s concept of reflective and political judgement, emphasizing the ability to imagine others’ perspectives and construct general principles. The educational task, therefore, encompasses not only conveying factual knowledge but also nurturing reflective judgement that strikes a balance between factual truth and divergent interpretations, values, and interests.

Enabling role of civil society organizations (CSOs) in local environmental management in the Philippines: A systematic review

ABSTRACT How enabled is civil society in the Philippines’ local environmental management scene? A systematic review with predetermined criteria identified 21 studies that describe the contributing roles of civil society organizations (CSOs) in their environmental initiatives. The review reveals that CSOs in the Philippines take roles as Advocate, Giver, Mediator, and Partner. Key enabling indicators influencing their effectiveness include their ability in providing mutual benefits, engaging operationally, resolving conflicts proactively, adapting to dynamic settings, incorporating local knowledge, building social trust, and harmonizing stakeholder knowledge. Despite their strong potential, CSOs in the country face challenges such as divergent stakeholder interests, bureaucratic weaknesses, community unacceptability, weak local tourism control, biodiversity blind spots, and legal resistance. Understanding the dynamics of CSO engagement leverages their strengths while addressing their barriers to realize their full potential as actors in local environmental management. This study provides valuable insights for policymakers and practitioners seeking to enhance CSO engagement in the Philippines and within the broader discourse of sustainable development in the Global South.

Firms’ financing and debt maturity choices: An empirical analysis from the perspective of asset value dynamics

AbstractWe examine empirically the relationship between the dynamics of firm value and their financing and debt maturity choices. Theoretical studies show that the actual drift of firm value is a key determinant of firms’ leverage and debt maturity by incorporating the conflicts between undiversified insiders (managers) and well‐diversified outside investors. We empirically analyze firms’ incremental leverage and debt maturity choice important determinants of firms’ leverage and debt maturity, we find that the drift, or the expected return of total assets, does affect the firms’ choices of incremental leverage and debt maturity, as predicted by theoretical studies. Our results provide the evidence that the divergence of interests between undiversified managers and well‐diversified shareholders has significant impact on firms’ financing policies that are generally controlled by managers, and the resulting leverage and maturity choices may deviate from maximizing shareholders’ value.