Empirical Specification Research Articles

What accounts for the effect of sustainability engagement on stock price crash risk during the COVID-19 pandemic—Agency theory or legitimacy theory?

In this study, we conduct a textual analysis of the third-party disclosure of corporate sustainability news focused on the Standard and Poor's 500 firms in the United States market during the first and second quarter of 2020. We find a positive relationship between corporate sustainability news release and firm-specific stock price crash risk. This finding is surprising, but it indeed aligns with agency theory. It indicates that the coronavirus disease (COVID-19) pandemic exacerbated the tendency of managers under increasing financial pressure to use the sustainability information release as a mechanism to mask and withhold bad news for extended periods at the expense of shareholders. This tendency results in high stock price crash risk. Our results are robust to alternative empirical specifications, estimation methods, and tests for endogeneity. Moreover, additional evidence reveals that agency theory dominates legitimacy theory in explaining the effect of sustainability on this risk during the COVID-19 pandemic.

Gender composition of children and sanitation behavior in India

Open defecation has been linked to various environmental and public health issues and has gained significant policy attention. Investing in better sanitation has also been advocated to provide women with privacy and protection from harassment. Nonetheless, previous research has shown that because of son-biased preferences, households in India underinvest in outcomes for their female children. Linking the gender composition of children to the sanitation behavior in Indian households, I find that households increase toilet ownership in the presence of female children by 5% in urban and 2.5% in rural areas, respectively. These results are robust to various empirical specifications, falsification tests, and bounding analysis to test for omitted-variable bias. Various heterogeneity analyses suggest that the decline in open defecation in response to having a female child is driven by households living in regions with a higher prevalence gender-based harassment and weaker law and order. These findings provide new evidence that differences in the gender composition of households create differential incentives to adopt toilets, which can be harnessed to reduce open defecation in India.

Regulatory fragmentation and internal control weaknesses

This study examines the relationship between regulatory fragmentation and internal control weaknesses in U.S. firms using a dataset sourced from the Federal Register. The findings reveal a significant negative association between regulatory fragmentation and the likelihood of internal control weaknesses. The study further finds that regulatory fragmentation reduces the number of internal control weaknesses. These results suggest that regulatory fragmentation plays a beneficial role in enhancing the effectiveness of internal control mechanisms. Alternative empirical specifications and identification strategies are employed to address endogeneity concerns, supporting the robustness of the main findings. Unlike existing literature emphasizing the adverse effect of regulatory fragmentation, this study highlights the benefits of coordinated regulatory fragmentation in mitigating internal control vulnerabilities and strengthening corporate governance. The findings provide valuable insights for policymakers and companies, emphasizing the need to consider regulatory fragmentation as a means to enhance internal control practices and promote stronger corporate governance.

Does mandatory expenditure on CSR affect firm value? Empirical evidence from Indian firms

PurposeThe purpose of this study is to examine the impact of mandatory corporate social responsibility (CSR) spending on firm value in the Indian context.Design/methodology/approachUsing firm-level data over the period 2012–2017, this study uses the difference-in-differences (DID) technique combined with matching to control for potential endogeneity of the decision to comply with the CSR Act since the Act in its current form is applicable as a comply-or-explain obligation.FindingsThe results of this study suggest that mandatory CSR spending has a positive and statistically significant impact on firm value. These results remain robust to alternative econometric techniques such as regression discontinuity design (RDD) and randomization inference test as well as to alternative empirical specifications. Furthermore, the study demonstrates that the positive effect of CSR spending on firm value is more pronounced for firms with higher information asymmetry problem and lower institutional holdings.Originality/valueThis study explicitly considers the “comply-or-explain” flexibility option, in terms of spending on CSR, provided to Indian firms for the initial two to three years and investigates whether spending on CSR helps firms enhance their firm value. The study also finds that the positive effect of CSR spending on firm value is more pronounced for firms with higher information asymmetry problems and lower institutional holdings.

International linkages and female share of employment: Plant-level evidence from a developing country

This paper examines the relationship between international linkages (i.e. exporting, importing, and foreign direct investment) and the share of skilled, unskilled, and total female workers employed in Indonesian manufacturing plants. We utilize plant-level panel data and estimation procedures that account for endogeneity and selection issues to achieve the study objective. Our analysis suggests that foreign ownership and exporting activities lead to a higher share of both skilled and unskilled female employment. However, these effects are more substantial for skilled female workers than for unskilled female workers. The results are robust to the use of different econometric methods and empirical specifications.

Options trading and firm investment efficiency

AbstractWe examine the effect of options trading on an optioned firm's investment decisions. We find that active options trading improves an optioned firm's investment efficiency, and that this effect holds under several alternative empirical specifications and identification strategies, including fixed‐effects models, different matching methods, an instrumental variable approach, a Granger causality test and a quasi‐natural experiment based on the listing decisions of the options exchanges. This relation is mediated by two factors, namely, information asymmetry and uncertainty, consistent with the notion that options trading improves investment efficiency by providing information that facilitates external monitoring and managerial learning. The results of cross‐sectional analyses indicate that the effect of options trading on investment efficiency increases with firms’ tendency to overinvest or underinvest, and with managers’ risk‐taking and learning incentives. We also demonstrate that the effect of options markets on investment efficiency is distinct from the effect of stock markets. Overall, our findings suggest that options trading plays a nonnegligible role in improving an optioned firm's investment efficiency.

Determinants of public investment for port authorities using port-level data: An analysis of the Spanish port system

This study analyses the economic and political determinants of Spanish port authorities' public investment from 2000 to 2016 using port-level data. We distinguish two types of investment: (i) infrastructure and capacity; (ii) logistics and intermodal transport. We estimate the empirical specification considering dynamic effects and endogeneity. Unlike previous empirical studies in which aggregate port investment was considered, our results show that both economic criteria and political factors matter in the Spanish port investment allocation. We also find that the relevance of the political factors differs by the type of port investment. In this sense, we show that the coincidence between the incumbent political party in the central and local governments influences the port investment related to infrastructure and capacity, whereas the coincidence between the incumbent political party in the central and regional governments affects logistics and intermodal transport investment.

An assessment of bilateral debt swap financing indispensable for economic growth and environment sustainability: a policy implication for heavily indebted countries.

Bilateral debt swap is an innovative global financing mechanism designed to support heavily indebted countries (HICs). It is a debt-restructuring process involving donor countries forgiving debt owed by HICs in exchange for commitments to undertake projects on environment and socio-economic development. It is a unique approach designed to help heavily indebted countries get back on their feet. Effective debt swap financing can lead to both economic growth and environment sustainability, but they are challenging to implement. This study examines the impact of bilateral debt swap financing on economic growth and environment sustainability. For the purpose, we have used debt swap index developed with Kaiser-Meyer-Olkin (KMO) methodology. KMO widely used approach of Principle Component Analysis (PCA) to solve the problem of "over-identification" and make strong correlation among endogenous variables of interest. In order to validate the nexus empirically between bilateral debt swap financing with economic growth and environment sustainability, we have employed the Two-Step System Generalized Method of Moments (SYS-GMM) approach in 25 countries for the period of 2002 to 2021. This modern econometric method addresses endogeneity issues and controls for unobserved heterogeneity in panel data. At the same time, the technique addresses the simultaneity problem, reverse causality, and remove selection bias. Findings of the study shows that effective bilateral debt swap financing can boost economic growth and environment sustainability by investing domestic resources for targeted activities along with reduced debt burden. Empirical results reveal that 1% change in debt swap financing can lead to a maximum of 0.23% growth in the economy and 0.28% improvement in environment sustainability. However, it is important to note that in most empirical specifications, results are inconclusive. One possible reason for this is often ineffective debt swap practices coupled with inadequate monitoring and evaluation in HICs. Policymakers should focus on enhancing debt swap policies to promote economic growth and environment sustainability.

THE EFFECTS OF INTERNATIONAL LOGISTICS IN GLOBAL VALUE CHAIN TRADE

The current empirical literature shows that logistics plays a vital role in increasing the total volume of international trade. However, there is scarce literature on the impact of logistics performance on global value chain trade. Therefore, the objective of this paper is to investigate the effect of logistics performance on global value chain trade, measured by the value-added exports. The empirical specification of this paper is based on the structural gravity model of international trade. The analysis is based on biennial panel data on bilateral trade flows for the EU-15, CEE, and the Western Balkans and covers the period from 2010 to 2018. The model is estimated with a Poisson Pseudo Maximum Likelihood Estimator. The results show that logistics performance appears to have significant positive effects on global value chain trade and that the logistics performance of the partner country plays a more critical role than the logistics performance of the reporting country. Institutional quality matters greatly for global value chain trade. Individual differences in the observed variables were found between selected groups of countries. The need to improve logistics performance and invest in knowledge and technology will help countries improve in value chains, along with adequate institutional support.

Trade and Peace Revisited

The existing literature on trade and peace has not definitively established whether bilateral trade reduces the probability of militarized conflict. While estimated effects remain highly sensitive to empirical specifications, a commonly overlooked aspect within this literature is the insufficient consideration of potential heterogeneous relationships across country pairs and the temporal dependence of conflicts. In this paper, we present supportive evidence of the pacifying effect of trade when both heterogeneity and temporal dependence are simultaneously taken into account. By applying the Arellano-Bond model to datasets from Keshk, Pollins, and Reuveny (2004) and Hegre, Oneal, and Russett (2010), which respectively indicated no and negative effects of trade on conflict, we find that bilateral trade significantly reduces the likelihood of conflict in both datasets. This finding adds further support to liberal claims regarding the interconnected nature of economic interdependence and conflict.

Ultimate axial strength prediction of concrete-filled double-skin steel tube columns using soft computing methods

In this study, two hybrid models, grey wolf optimizer (GWO) combined with group method of data handling (GMDH) and random forest (RF) optimized by particle swarm optimization (PSO), are proposed to predict the ultimate axial strength of concrete-filled double-skin steel tube (CFDST) columns. 139 sets of data collected from the literature were used to build the proposed models. The proposed hybrid models were compared with other machine learning models as well as empirical equations and design specifications. The results show that for all datasets, the integral absolute error (IAE), root relative squared error (RRSE), mean absolute percentage error (MAPE) and coefficient of determination (R2) predicted by PSO-RF and GWO-GMDH models are 0.057, 0.092, 0.068 and 0.992; 0.068, 0.094, 0.110 and 0.989, respectively. Compared with the single RF and GDMH models, the IAE, RRSE and MAPE values of the proposed PSO-RF and GWO-GMDH models decreased by 3.91%, 13.66% and 6.34%; 37.81%, 48.78% and 39.24%, respectively, and the R2 value increased by 1.24% and 1.67%, respectively. In addition, the factors affecting the failure of CFDST columns are analyzed through the parameter sensitivity analysis.

Reconceptualizing transfer pathways: policy transfer and armed UAV proliferation

ABSTRACT While policy transfer remains a widely used approach for understanding public policy formation, several conceptual shortcomings limit the approach’s capacity for explanation. Notably, the concept of “transfer pathway” lacks a precise conceptual definition and empirical specification, limitations reflecting broader gaps in the policy transfer literature. This article contributes to the study of policy transfer by explicitly defining transfer pathway and demonstrating how a more expansive transfer pathway conceptualization can increase analytical granularity. Conceptual insights developed here are empirically applied to U.S. State Department announcements in late 2020 to sell armed unmanned aerial vehicles (UAVs), first to the United Arab Emirates and then Morocco. Such cases illustrate two novel transfer pathways, the tortuous pathway and the foreign policy pathway, offering a sketch of how governments transfer policies in the foreign and security policy domain. By employing process tracing, specific causal process observations associated with the arms transfer processes in each instance can be identified to better understand specific transfer outcomes.

Airport service quality perception and flight delays: Examining the influence of psychosituational latent traits of respondents in passenger satisfaction surveys

The service quality of a passenger transport operator can be measured through face-to-face surveys at the terminals or on board. However, the resulting responses may suffer from the influence of the intrinsic aspects of the respondent's personality and emotional context at the time of the interview. This study proposes a methodology to generate and select control variables for these latent psychosituational traits, thus mitigating the risk of omitted variable bias. We developed an econometric model of the determinants of passenger satisfaction in a survey conducted at the largest airport in Latin America, São Paulo GRU Airport. Our focus was on the role of flight delays in the perception of quality. The results of this study confirm the existence of a relationship between flight delays and the global satisfaction of passengers with airports. In addition, favorable evaluations regarding airports' food/beverage concessions and Wi-Fi services, but not their retail options, have a relevant moderating effect on that relationship. Furthermore, dissatisfaction arising from passengers' interaction with the airline can have negative spillover effects on their satisfaction with the airport. We also found evidence of blame-attribution behavior, in which only delays of internal origin, such as failures in flight management, are significant, indicating that passengers overlook weather-related flight delays. Finally, the results suggest that an empirical specification that does not consider the latent psychosituational traits of passengers produces a relevant overestimation of the absolute effect of flight delays on passenger satisfaction.

The reassuring effect of firms' technological innovations on workers' job insecurity

PurposeThis work analyses how the adoption of technological innovations correlates with workers' perceived levels of job insecurity, and what factors moderate such relationship.Design/methodology/approachThe study makes use of the 2018 wave of the Participation, Labour, Unemployment Survey (PLUS) from Inapp. The richness of the survey and the representativeness of the underlying sample (including 13,837 employed workers) allow employing various empirical specifications where it is possible to control and moderate for many socio-demographic features of the worker, including her occupation and industry of employment, thereby accounting for various potential confounding factors.FindingsThe results of this ordered logit estimations show that workers' perception of job insecurity is affected by many subjective, firm-related and even macroeconomic factors. This study demonstrates that the adoption of technological innovations by companies is associated with lower levels of job insecurity perceived by their workers. In fact, the adoption of technological innovations by a company is perceived by surviving workers (those who remain in the same firm even after the introduction of such innovations) as a signal of the firm's health and its commitment to preserving the activity. Individual- and occupation-specific moderating factors play a limited role.Originality/valueThis study estimates how perceived job insecurity relates to the technological innovations adopted by the firms in which the interviewees are employed rather than analyzing their general concerns about job insecurity. In addition, this study identifies different types of innovations, such as product and process innovation, automation and other types of innovations.

Cover crops, crop insurance losses, and resilience to extreme weather events

AbstractThis study investigates whether cover crop adoption reduces extreme‐weather‐related crop insurance losses. To achieve this objective, we utilize a county‐level panel data set with information on cover crop adoption acres, crop insurance losses (i.e., specifically due to drought, excess heat, or excess moisture), and a number of weather variables. The data cover the main row crop production region in the Midwestern United States (US) for the period 2005 to 2018. We utilize linear fixed effects econometric models and a number of robustness checks in the empirical analysis (i.e., a fractional regression approach, two “external‐instrument‐free” estimation procedures, and a variety of alternative empirical specifications). The estimation methods used take advantage of the panel nature of the data to address various specification and endogeneity issues. We find evidence that counties with higher cover crop adoption tend to have lower crop insurance losses due to drought, excess heat, or excess moisture. Our analysis also indicates that cover crops likely have stronger loss mitigation effects against excess moisture events (like floods) and somewhat weaker loss mitigation impacts against droughts and excess heat. Nonetheless, our results overall suggest that cover crops can enhance resilience to extreme weather events and have the potential to be an effective climate change adaptation strategy in US agriculture.

Does intergenerational educational mobility vary by sexual identity? A comparative analysis of five OECD countries.

Lesbian, gay and bisexual people are disadvantaged in terms of health and socio-economic status compared with heterosexual people, yet findings pertaining to educational outcomes vary depending on the specific identity and gender considered. This study delves into these unexplained findings by applying a social-stratification lens, thereby providing an account of how intergenerational educational mobility varies by sexual identity. To accomplish this, we use representative data from five OECD countries and a regression-based empirical specification relying on coarsened exact matching. We find that gay and lesbian people have higher educational attainment than heterosexual people in all five countries and that these higher levels of education stem from greater rates of upward educational mobility among gay/lesbian people. There were, however, few differences between heterosexual and bisexual people. Variation across countries emerged when analyses were stratified by gender, with higher rates of upward mobility observed for gay men in Australia, Chile, the United Kingdom, and the United States and lesbian women in Australia and Germany. Overall, our results align with previous claims that education can be a strategy for gay/lesbian people to avoid actual or anticipated discrimination. However, variation in these patterns across groups suggests that other mechanisms may also be at play.

Corruption and Total Factor Productivity in the Long-Run: Evidence from Post-WW2 Turkey

ABSTRACT In this study, we investigate the relationship between corruption and total factor productivity (TFP) in Turkey. Our study contributes to the literature in several ways in terms of data, empirical specification, and method. First, we use a new and novel index of corruption for Turkey between the years 1950 and 2014. Second, we estimate the long-run cointegrating relationship between corruption and TFP in Turkey. Finally, we not only investigate how corruption affects TFP, but also if this effect is conditional on government size. We find that corruption decreases TFP in the long-run and its adverse effects on TFP increases with government size.

Data‐Driven Empirical Conductance Relations During Auroral Precipitation Using Incoherent Scatter Radar and All Sky Imagers

AbstractWe present empirical conductance relations that are derived from incoherent scatter radar observations and correlated with all sky imager observations to identify the morphology of the aurora. We use 75,461 events collected using the Poker Flat Incoherent Scatter Radar (PFISR) with associated all sky imagers observations spanning the years 2012–2016. In addition to classifying these events based on auroral morphology, we estimated the Hall and Pedersen conductance and the differential number flux from which the energy flux and the average energy can be calculated. The differential number flux was estimated using the maximum entropy inversion method described in Semeter and Kamalabadi (2005, https://doi.org/10.1029/2004RS003042), but now incorporating the Fang et al. (2010, https://doi.org/10.1029/2010GL045406) ionization model. The main results of this investigation are the power law equations that describe the median, 90th, and 10th percentile Hall and Pedersen conductance as a function of energy flux and average energy. These power law fits are performed for different auroral morphology including all events, discrete, diffuse, and pulsating auroral events. The median Pedersen conductance is found to be in good agreement with past empirical conductance specifications by Robinson et al. (1987, https://doi.org/10.1029/JA092iA03p02565); however, the median Hall conductance from the PFISR observations is found to be larger than the empirical Hall conductance formulas by Robinson et al. (1987, https://doi.org/10.1029/JA092iA03p02565). Pulsating aurora is found to be the most frequently occurring auroral morphology. Furthermore, pulsating aurora has an important contribution to Hall conductance since it has higher average energies than discrete aurora. The results from this investigation are applicable to space weather models and may enable better agreement between model‐data comparisons.

Intellectual Capital in Asia Stock Market: A Systematic Literature Review and Research Agenda

In some severe global economic conditions like the Corona Virus Disease (COVID-19) pandemic in 2019, most of the economic sectors and stock market have dropped significantly. However, not all of the investors had overreacted and carried out panic selling during the severe condition, because they believed in their analysis either using financial and non-financial literacy such as intellectual capital (IC). As non-financial information, the existence of IC is undeniable to support better quality from the company itself and its stock return in the market. The purpose of this research is to provide valid and reliable information for future studies and to become a guidance to help researcher in analysing and mapping data comprehensively from the research problems. In this paper, it will discuss the three main research questions. Firstly, how is IC implemented in Asia public listed companies towards the reaction on stock market? Secondly, what are the syntheses and limitations of IC work in three different perspectives, consist of: the empirical findings, theories, and methodological specifications? Third, what are the recommendations for future research agenda on intellectual capital in Asia stock market? In this research, the method used was the systematic literature review (SLR), and carried out analysis from three different perspectives: empirical, theoretical, and methodological frameworks. The research result shows that the author can provide 14 past studies, four main theories, and two methodological recommendations to be added for future studies to examine the sustainable power of IC performance in dealing with the stock price movement. Also, all of the findings may be useful to help other authors in addressing the research gaps found and exposing more suitable theories and reliable methodological framework.

Women's education, marriage, and fertility outcomes: Evidence from Thailand's compulsory schooling law

Increased education affects market and non-market outcomes. This paper investigates the causal impact of the extension of compulsory education from 6 to 9 years on females’ education, marriage, and fertility outcomes in Thailand. Using data from the Multiple Indicator Cluster Survey (MICS) and a donut-hole Regression Discontinuity (RD) design, we show that the new law increases lower secondary school completion in girls, leading to decreased probabilities of giving birth in the school-age years (14–17 years). The policy primarily affects the marginal child leading to the postponement of the timing of their fertility to after-school years. We also document heterogeneity and show that the fertility effects are stronger for Muslim women. The policy leads to a consistent drop in the probability of marriage and cumulative births for Muslim women, which sustain beyond the completion of schooling years. The results hold with alternative empirical model specifications and falsification tests.