Contagion Effects Research Articles

Corporate misconduct and corporate social responsibility: the roles of CEO incentives and institutional ownership

Purpose This study aims to examine why executives increase investments in corporate social responsibility (CSR) as a strategic action to protect their firms’ reputation from the possibility of a contagion effect following CSR-related corporate misconduct in the industry by drawing on an impression management perspective. This study also examines internal and external governance mechanisms as boundary conditions. Design/methodology/approach The sample includes panel data of firms listed in the S&P 500 index from 2009 to 2013. The authors used firm fixed-effects models to test the hypotheses. Findings The results show that recent CSR-related corporate misconduct occurred in other firms, inducing executives to increase investments in CSR. Moreover, internal and external governance mechanisms, which are CEO incentives and institutional ownership, moderated the relationship. Originality/value This study contributes to prior literature on the factors influencing CSR at the multilevel of analysis by examining how recent CSR-related corporate misconduct in the industry interacts with corporate governance mechanisms as boundary conditions to influence firm commitment to CSR.

Asymmetric risk contagion effect of the interaction between the real economy and the financial sector—an analysis based on the domestic commodity price index

As the uncertainty of the global economy intensifies, domestic real economy risks and financial risks may interact and worsen under international risk shocks. Commodity prices are an important channel for transmitting international economic and financial risks. Taking January 2007 to July 2021 as the sample period and using data from nine commodity price indices and banking, diversified finance, and insurance industry indices, this article uses rolling regression method to construct different commodity price risk and financial sector risk indicators. Combined with a vector autoregressive model, the risk contagion effect is calculated. The analysis indicates that there exist significant asymmetric risk contagion effects between various commodities (with energy and steel having the largest risk spillover effects) and there are significant net risk spillover effects on financial sectors (with insurance having the largest risk spillover effect). There are asymmetric risk contagion effects among different financial sectors, with varying degrees of risk spillover effects on commodity prices (with the banking sector having the greatest risk spillover effects on commodity prices and other financial sectors, and diversified finance having the greatest risk spillover effect on commodities). During major global financial events, the risk spillover effects of commodities and input effects increase significantly due to the intensification of the risk spillover effects of energy, steel, and nonferrous metals. The risk spillover effect between commodities and the overall risk spillover effect have significantly increased. The financial sector’s overall net risk input effect has increased, while the net risk input effect of the insurance sector has also increased. These findings are significant for improving systemic financial risk monitoring indicators and adopting accurate prevention and control measures.

Financial Connectedness and Contagion Risk in a Dual Banking System

The 2008 subprime mortgage crisis laid bare the vulnerabilities inherent in financial interdependencies, where shocks originating from one sector and entity rapidly disseminated through complex networks, engendering a contagion effect that reverberated across the banking system. The present paper offers a comprehensive exploration of systemic risk, financial interconnectedness, and contagion within the context of a dual banking system. This appears to be a particular problem because of the heterogeneous market structure, which raises major questions about financial stability. Recognizing the profound implications of the interplay between Islamic and conventional banks, this study employs a comprehensive framework to dissect the intricate dynamics at play. The results reveal the existence of significant interconnectivity, which experiences a notable augmentation during periods of turmoil. Additionally, we provide an analysis of the topological structure of the interlinkage between Islamic and conventional banks, indicating substantial transmission of volatility, both unidirectionally and bidirectionally, across intersectoral and intrasectoral domains. However, our findings indicate that both incoming and outgoing connectivities are primarily influenced by the conventional banking sector.

Unveiling the Contagion Effect: How Major Litigation Impacts Trade Credit

Unveiling the Contagion Effect: How Major Litigation Impacts Trade Credit

Contagion Effect of Priority Sector Lending of Banks on Non-Performing Assets: A Special Reference to Loan Disbursement to Self Help Groups

Contagion Effect of Priority Sector Lending of Banks on Non-Performing Assets: A Special Reference to Loan Disbursement to Self Help Groups

Smile or Not Smile: The Effect of Virtual Influencers' Emotional Expression on Brand Authenticity, Purchase Intention and Follow Intention

ABSTRACTVirtual influencer (VI) has become a new tool for brand promotion. The existing researches mainly focus on VI's external feature cues, such as identity, appearance, and sensory factors. In addition to carefully curated images, VI can also display emotions like a human influencer. Emotional expression as a non‐verbal social cue, is a key factor influencing consumers. This research focuses on VI's emotional cues and their impact on consumers' behavioral intentions. Based on emotional contagion theory (ECT) and elaboration likelihood model (ELM), this paper discusses the emotional contagion effect of VI emotional display (smiling vs. non‐smiling) and its matching effect with brand stereotypes. The results of three online experiments (N = 691) show that: firstly, VI's smiling emotion has a stronger primitive emotional contagion. Secondly, VI emotional expression has a positive impact on brand authenticity, purchase intention, and follow intention through affective empathy and cognitive empathy. Finally, this study found that VI's smile does not always produce a more positive effect than not smiling. In advertising situations that highlight brand competence, VI without a smile is more persuasive. Our results provide a new explanation mechanism for the influence of VI emotional expression on consumers' behavioral intention and provide a new perspective and advertising strategy for VI marketing practice.

Analysis of Financial Contagion and Prediction of Dynamic Correlations During the COVID-19 Pandemic: A Combined DCC-GARCH and Deep Learning Approach

This study aims to combine the use of dynamic conditional correlation multiple generalized autoregressive conditional heteroskedasticity (DCC-GARCH) models and deep learning techniques in analyzing the dynamic correlation between stock markets. First, we examine the contagion effect of the high-risk financial crisis during COVID-19 in the United States on the Latin American stock market using a dynamic conditional correlation approach. The study covers the period from 2014 to 2020, divided into the pre-COVID-19 period (January 2014–February 2020) and the COVID-19 period (March 2020–November 2020), to examine the sudden change in average conditional correlation from one period to the next and identify the contagion effect. The contagion test showed significant contagion between the S&P 500 and Latin American indices, except for Argentina’s MERVAL. Additionally, we applied deep learning models, specifically LSTM, to predict market dynamics and changes in volatility as an early warning system. The results indicate that incorporating LSTM improved the accuracy of predicting dynamic correlations and provided early risk signals during the crisis. This suggests that combining DCC-GARCH with deep learning techniques is a powerful tool for predicting and managing financial risk in highly uncertain markets.

Economic Tremors From a Perfect Storm: The Ukrainian Crisis and Its Impact on Regional Stock Market Volatility

This study investigates the impact of the Russia-Ukraine war on stock market volatility in neighboring countries, analyzing five stock market indices (BET, BUX, WIG, SAX, and MOEX) over a three-year period encompassing one year before and two years after the conflict’s outbreak. Employing four volatility estimators (Close-to-Close, Parkinson, Garman-Klass, and Rogers-Satchell), this research examines the evolution of market volatility and inter-market correlations. Findings reveal a general increase in volatility across most indices following the war’s commencement, with the MOEX index experiencing the highest turbulence. The concept of a “proximity penalty” is partially supported, as geographical closeness to the conflict zone does not uniformly correspond to increased volatility. Also, findings show an initial strengthening of correlations between markets in the first year of the war, suggesting a “contagion effect.” However, this is followed by a weakening of correlations in the second year, indicating a potential “decoupling effect” as markets begin to respond more to local economic conditions. These results have significant implications for investors, policymakers, and risk managers, highlighting the need for dynamic portfolio management strategies, tailored policy responses, and flexible risk models that can adapt to changing market conditions during prolonged geopolitical crises. This study contributes to the existing literature by extending the temporal scope of analysis beyond the immediate aftermath of the war’s outbreak and providing insights into the “proximity effect” in the context of a major European conflict. The observed patterns of initial volatility spikes followed by varying degrees of persistence and changing correlation structures offer a nuanced picture of how geopolitical events impact financial markets over time, emphasizing the complex interplay between political events and financial market dynamics. JEL classification: G15, F51 Article History: Received: October 14, 2024; Reviewed: November 27, 2024; Accepted: December 2, 2024; Available online: December 17, 2024.

Contagious risk: Nexus of risk in climate, epidemic, geopolitics, and economic.

In recent years, "black swan" events have increasingly occurred across climate, epidemics, geopolitics, and economics, leading to a gradual coupling of different types of risk. Different from isolated shocks as a single type of risk affecting a specific industry, a nexus of risks allows one risk area to quickly relate to others, resulting in more catastrophic impacts. Utilizing an integrated framework, we investigate the contagion effects among climate policy uncertainty, the infectious disease equity market volatility tracker, geopolitical risk, and economic policy uncertainty using volatility, skewness, and kurtosis as risk measures. The results indicate that: (1) The contagion effect of different types of risk increases with higher order risk measures, suggesting that more extreme events are more likely to be contagious across domains. (2) Approximately two-thirds of risk contagion occurs contemporaneously, while about one-third occurs with a lag, indicating that risk contagion combines both immediacy and continuity. (3) Risk contagion exhibits significant time-varying and heterogeneous characteristics. Our study elucidates the inherent contagion characteristics between different types of risk, transforming the understanding of risk from a one-dimensional to a multidimensional perspective. This underscores that risk management should not be confined to a single domain; it is crucial to consider the potential impacts of risks from other industries on one's own.

How do farmers respond to Workers' compensation insurance premiums, hazards, and claim contagion? Empirical evidence from Taiwan

AbstractWorkers' compensation benefits are of significant importance to employees generally, though relatively little is known about their application to agricultural workers. We examine how farmers respond to workers' compensation by exploiting the introduction of a unique Farmer Occupational Injury (FOI) program in Taiwan. The FOI provides farmers with income compensation for medical expenses, losses caused by temporary and permanent disability or death, and funeral expenses. We examine farmers' participation decisions and the timing of participation in the program. Using the individual‐level administrative records of the program and a two‐part econometric model, the estimated elasticities of the out‐of‐pocket insurance premium and environmental risk to FOI enrolled days are −0.36 and 0.27, respectively. Claim contagion, a form of moral hazard, has been discussed in the context of workers' compensation programs, though little prior work exists. Using aggregate township‐level panel data, we find evidence of the claim contagion effect. We find that a 1% increase in the cumulative compensation payments increases the number of claims filed in the following period by 0.14%. We also find significant claim contagion for temporary disability and funeral allowance claims, but not for permanent disability.

You’re not welcome! Violence and support for an open grazing ban policy in Kaduna, Nigeria

This study examines the effect of victimization and religious affiliation on support for a policy banning the open grazing of livestock in the northern Nigerian state of Kaduna. This policy, which aims to reduce the incidence of conflicts between nomadic herders and sedentary farmers, has been implemented to varying degrees in some states across Nigeria. Kaduna is a suitable case study for investigating these relationships because, despite having the third-highest incidence of farmer–herder conflicts out of Nigeria’s 36 states, the state government has not implemented an open grazing ban policy there. The regression results show that victimization by herders increases the likelihood of supporting the policy. On average, Muslims are more supportive of the policy than Christians. The higher support among Muslims is quite surprising because most of the respondents who have been victimized by herders are Christians. Muslims might be more supportive of an open grazing ban policy due to a contagion effect: the common religion of Islam that they share with nomadic herders could lead to the attribution of blame for farmer–herder conflicts to Muslims, making them more eager to see an end to the conflict. This eagerness might be what leads to increased support for an open grazing ban policy. JEL Codes: D74, N57, Z12

The transferability of passion: how green influencers inspire tourists’ green initiative support

The tourism industry has caused severe environmental damage, partially due to the high volume of tourists and their limited engagement in pro-environmental behavior. A viable solution to this problem lies in the involvement of green influencers in promoting green initiatives for destinations. This research seeks to understand how green influencers induce tourist support for such initiatives. Study 1 examines the “contagion effect” of passion, revealing that influencers’ genuine enthusiasm for a green initiative enhances tourists’ support for such an initiative by boosting their passion and green self-efficacy. Study 2 tests a moderated sequential mediation effect and shows that the contagion effect intensifies when influencers clearly articulate a call to action (goal specificity). The study’s findings help to fill gaps in the influencer marketing literature and offer practical guidelines for destinations seeking to collaborate effectively with influencers to promote sustainable tourist behavior by conveying influencer passion and establishing specific goals.

HSD57 Safety and Contagion in Inpatient Mental-Health Wards: An Estimate of the Contagion Effect From the Wardsonar Study in the UK

HSD57 Safety and Contagion in Inpatient Mental-Health Wards: An Estimate of the Contagion Effect From the Wardsonar Study in the UK

Spillover effects between economic indicators

Economic indicators play an important role in measuring economic development and market risk. This article selects OVX, EPU, GPR, VIX, and EMV indicators as the basic data, and uses the TVP-VAR-DY model to analyze their risk contagion effects and explore the relationship between risk spillover values and the Chinese stock market. The following conclusion has been drawn: the VIX indicator is the largest risk output in the system, and investors' panic has a profound impact on other markets; During the financial crisis, the spillover effect was different from that of the stock market, which was the main risk taker during the pandemic.

Impact of emotional contagion on waste separation intention in social media settings—Evidence based on machine learning and text analysis

Emotional contagion refers to the emotional experience caused by, and matched with, others' emotions, and is a process of emotional transmission. The emergence of social media has reshaped emotional contagion and the ways in which information is disseminated. Clarifying the emotional contagion mechanism associated with waste separation discussions on social networks and its dynamic effects on residents' intentions to separate waste is important in guiding residents toward waste separation. This study used data mining technology to crawl through 906,680 texts from social media. Machine learning models were used to identify emotions, and topic variables were extracted from text data to explore the effects of emotional contagion on residents’ intentions to separate waste. The empirical analysis indicated that the information disseminators’ emotions positively affected the information receivers’ emotions, thus indicating that an emotional contagion phenomenon exists in the social network and positively promotes residents' intentions to support waste separation, but also has negative effects on residents' intentions to implement waste separation. These findings imply inconsistencies in residents' attitudes and behaviors toward waste separation. Topic popularity buffered the effect of emotional contagion: excessive publicity did not result in better publicity effects. In addition, the regional economic development level weakened the influence of emotions on residents' intentions to separate waste. This study explored the mechanisms of emotional contagion and intention transmission pertaining to environmental protection topics, and offers important insights into the government's use of social media platforms to promote waste separation behavior among the public.

The Effect of Network Delay and Contagion on Mobile Banking Users: A Dynamical Analysis

This paper analyses how network contagion affects the acceptance or rejection of mobile banking, emphasizing the risk of contagion that hinders the growth of users among bank clients. As a research method, a mathematical model based on the Susceptible, Infected, and Recovered framework is used within a nonlinear dynamic system with a distributed time delay and the optimal control strategy. The approach aims to find the behaviour dynamics of mobile banking users, non-users, and undecided ones. Our model adds value to the existing literature by employing a qualitative dynamic analysis, as opposed to other studies that study contagion empirically. The steady states and their conditions for stability are found, and the critical value for time delay causing oscillatory is determined. The optimal control strategies are identified to enlarge the number of mobile banking users and decrease the number of non-users. Numerical simulations support the theoretical findings. The research has practical implications given that the model predicts mobile banking user behaviour in assisting policy decision-making and addresses the possible policy measures that aim to increase the number of mobile banking users. The conclusions suggest that financial inclusion can contribute to the expansion of mobile banking users.

Scale-specific effects of urban landscape pattern on the COVID-19 epidemic in Hangzhou, China

ContextUnderstanding the scale-specific effects of different landscape variables on the COVID-19 epidemics is critical for developing the precise and effective prevention and control strategies within urban areas.ObjectiveBased on the landscape epidemiology framework, we analyzed the scale-specific effects of urban landscape pattern on COVID-19 epidemics in Hangzhou, China.MethodsWe collected COVID-19 cases in Hangzhou from 2020‒2022 and combined the datasets of land use and land cover (LULC) and social gathering point (SGP) to quantify the urban landscape pattern. Optimal general linear model with stepwise regression was applied to explore the dominant landscape factors driving the COVID-19 transmission in the city. Furthermore, multi-scale geographically weighted regression illustrated the spatial heterogeneity and scale specificity of these landscape variables’ effects to COVID-19 epidemic.ResultsEight landscape variables of LULC and SGP patterns were identified which explained 68.5% of the variance in spatial risk of COVID-19. Different optimal bandwidths across these variables in MGWR indicated their scale-specific effects. LSI of green space enhanced the spatial risk across the entire region. The effects of landscape contagion, the number of water bodies, LSI of cropland and built-up areas, and the density of commercial houses were detected to vary between urban and suburban areas. The effects of LSI of water bodies and the density of shopping malls were found to vary among different districts.ConclusionsIn this study, we firstly discriminated the scale-specific effects of different landscape variables on the COVID-19 epidemic in the urban region. These findings can help to optimize the differentiated zoning prevention and control strategies for COVID-19 in cities and guide policy-making and urban planning at a multi-scale hierarchical perspective to improve public health and urban sustainability.

Does the Disclosure of Proprietary Information About Loan Losses Pose a Threat to Financial Stability?

AbstractConcerns have been expressed that public disclosure of outcomes from regulatory inspections of banks could lead to contagion and instability in the financial systems. This paper exploits Denmark's system of open inspection reports to analyze whether announcements of required increases in loan loss reserves by the Danish supervisory authorities, following an ordinary bank inspection, lead to contagion in financial markets. We find strong evidence of negative returns for the announcing banks over the period 2009–2020, suggesting that inspection reports containing proprietary information about loan losses provide value-relevant news to investors. We also find statistically significant contagion effects in the share price reactions among non-announcing peer banks. However, the reactions of other, non-affected banks are mild and confined to smaller banks, which is reassuring from a systemic risk perspective. Overall, our findings support the use of accounting disclosures as a policy tool for bank supervisors.

Social Influence in Social-Ecological Systems: Collaborative Capacity and Inter-Organizational Networks in the U.S. Sagebrush.

Collaborative governance has become a prominent, if not dominant, framework for thinking about multi-scalar and cross-jurisdictional environmental management. The literature broadly and consistently suggests that collaborative capacity and inter-organizational networks provide the institutional framework for addressing social-ecological system challenges. Surprisingly little scholarship addresses processes of social influence (or contagion) in social-ecological systems writ large, or more specifically as it relates to collaborative capacity. In this study, we consider the relationship between network position and structure and "collaborative capacity". We use a linear network autocorrelation model to establish a quantifiable, statistical relationship between an organizational-level outcome (collaborative capacity) for organizations that are relationally connected in a network addressing conservation and management issues in the U.S. sagebrush biome. We test three general hypotheses: (1) that social position - operationalized as network centrality - is related to collaborative capacity, (2) that subgroup or community structure - operationalized as modularity - is related to collaborative capacity, and (3) that there is a social contagion effect of collaborative capacity. Our results identify a positive relationship between collaborative capacity and organizations in positions of brokerage as well as evidence of a "collaborative capacity" contagion effect. This work contributes to our understanding of the role of bridging organizations and networks for large-scale environmental management.

Robots in the kitchen: The automation of food preparation in restaurants and the compounding effects of perceived love and disgust on consumer evaluations

Restaurants are swiftly embracing automation to prepare food, experimenting with innovations from robotic arms for frying foods to pizza-making robots. While these advances promise to enhance efficiency and productivity, their impact on consumer psychology remains largely unexplored. We present four experiments that demonstrate how food service automation leads to negative downstream effects (i.e., diminished taste perceptions, decreased willingness to pay, less favorable attitudes towards food items) across multiple food categories. This stems in part from two distinct contagion effects, whereby automation appears to undermine the food's ability to contain symbolic love (positive contagion from human contact) while simultaneously increasing feelings of disgust (negative contagion from machine contact). Moreover, we highlight how communicating the consumer-oriented benefits of automation can suppress the disgust associated with automation and subsequently mitigate the deleterious effects on consumer evaluations. Our findings suggest that service retailers should consider the psychological impact on consumers when shifting away from human involvement in a category as intimate and consequential as the production of our food.