Firm Level Research Articles

Modeling renewable energy market performance under climate policy uncertainty: A novel multivariate quantile causality analysis.

The renewable energy market in the United States of America (USA) has experienced several crests and troughs owing to the changes in the climate policies. These changes in the climate policies have impacted the climate risk management scenario in the USA. This impact has changed the behavioral pattern of the renewable energy drivers, and a supply-side analysis of this aspect is largely ignored in the literature. In this pursuit, the present study aims at analyzing the moderating role of climate policy uncertainty in shaping the behavior of renewable energy drivers in the USA. Given the risk analysis perspective, a novel multivariate quantile-on-quantile causality test is introduced in the present study to address five aspects of risk analysis, i.e., tail dependence, co-movement, predictability, multivariate, and asymmetric impact. Moreover, this test also addresses the omitted variable bias and absence of ortho-partiality distribution, which were inherent to Granger causality test. Along with the analysis at the national level, a firm-level analysis is also done by taking the top-5 renewable energy generation firms of the USA. The results show that the climate policy uncertainty has a dampening effect on the renewable energy drivers, and this effect differs at the firm level. These impacts show a significant policy dimension for addressing the climatic risk management concerns in the USA, while achieving the Sustainable Development Goal (SDG) 7 objectives.

Can Sustainability (ESG) Controversies Be Offset with Advertising? An Empirical Investigation into Advertising, Negative ESG, and Firm Value

Can advertising improve firm value following an incident of negative sustainability (i.e., a negative environmental, social or governance (NESG) occurrence?) This study provides an empirical investigation into NESG, its individual domains, and the mitigating role of advertising on firm value. We investigate firm level ESG sustainability violations and any corresponding advertising expenditures, utilized to counter negative opinions. First, we examine whether an NESG occurrence reduces firm value. Next, we investigate if firms experiencing an NESG occurrence alter their advertising expenditures and assess the resulting impact of this advertising spending on firm value. Finally, we determine if certain NESG occurrences benefit more from advertising than others. Using a sample of firms which engaged in at least one NESG event between 1995 and 2019, we find that firms increase advertising as a way to engage in damage control. Increasing advertising expenditures to offset NESG occurrences ultimately impacts firm value. Specifically, increasing advertising helps to reduce the NESG occurrence’s effect on firm value, but the individual domains of ESG do not respond the same to advertising efforts, suggesting that advertising as a mitigation tool remains nuanced, with the greatest positive effect being for environmental crises, no significant effect for social crises, and a negative effect for governance crises.

Variation In Hospital Salary Expenditures And Utilization Changes After Private Equity Acquisition, 2005-19.

Private equity (PE) acquisitions of health care providers are often framed as a monolithic intervention, but firms' strategies for generating returns for investors may vary. In a difference-in-differences analysis using data from the 2005-19 Medicare hospital cost reports, we compared 242 US hospitals acquired by PE firms with 870 matched control hospitals not acquired by such firms. By firm, we examined changes in salary expenditures (reflecting staffing costs of delivering care) and cumulative charges (reflecting service utilization) associated with acquisition. On average, hospitals acquired by PE firms reduced salary expenditures, whereas control hospitals increased salary expenditures. At the firm level, salary expenditures declined between 12.9percent and 27.3percent of preacquisition levels. These reductions occurred across most clinical departments, although the specific departments and sizes of salary cuts varied across firms. Consistent with reduced staffing and capacity, most hospitals demonstrated a simultaneous decline in cumulative charges after acquisition-despite often raising their chargemaster rates (charges per service)-implying a reduced volume of services delivered. Some hospitals exhibited an alternative strategy of increasing cumulative charges without cutting salary expenditures. PE firms varied in management strategies, with most demonstrating cost cutting through salary expenditures.

The influence of regional gambling on financial advisor misconduct in the United States

ABSTRACT This study examines whether regional gambling attitudes influence financial advisor misconduct in the United States. Using a sample of more than 2.5 million advisor–year observations, we find that financial advisors and financial advisory firms operating in areas with high local gambling preferences are more likely to engage in misconduct. In-depth analyses at both the individual and firm levels, employing alternative measures of local gambling preference, different estimation models and instrumental variable approaches, confirm this finding. Our findings shed light on the role of regional gambling in shaping unethical financial conduct, offering valuable insights for practitioners and regulators.

Intellectual capital, environment-related absorptive capacity and environmental performance: Firm-level evidence from China's E&E sector.

Much of the existing literature on environmental performance has focused on human capital and intangible assets such as environmental policies and strategies, the role of intellectual capital has largely been overlooked. This study aims to investigate the impact of intellectual capital on environmental performance at the firm level, specifically in the electrical and electronics (E&E) sector in China. By considering human, relational, and structural capital as integral elements of intellectual capital, we assess their direct influence on environmental performance and explore how these components interact with other factors in driving environmental outcomes. We also examine the role of environmental related absorptive capacity in this relationship. The data is collected from 113 firms in the E&E sector, and PLS-SEM is applied to analyse the relationship between intellectual capital and environmental performance. Our findings reveal a significant and positive impact of intellectual capital on environmental performance, highlighting its critical role in promoting sustainable business practices. Managers and policymakers are urged to integrate sustainability-focused training, strengthen inter-organizational networks, and embed environmental management systems to achieve dual goals of improved environmental and economic performance.

From values to value: exploring the dual impact of national spirit on corporate ESG performance

PurposeNational spirit, as a powerful legitimacy trait, shapes the consistency of a firm’s financial decisions, employee engagement and sustainability strategies. Combining this with resource-based view (RBV) theory, the study empirically examines the dual impact of national spirit on corporate environmental, social and governance (ESG) performance.Design/methodology/approachThis paper utilizes data from Chinese A-share listed companies from 2009 to 2022 and employs machine learning methods to construct enterprise-level indicators of national spirit. In addition, the paper scrapes nearly 3 million ESG-related online news articles from the Baidu news website and uses machine learning methods to measure media ESG attention and sentiment.FindingsThe findings reveal that national spirit significantly enhances corporate ESG performance, operating through both internal and external channels: promoting social financing and boosting employee morale. Further analysis indicates that the positive influence of national spirit on corporate ESG performance is more pronounced in private enterprises, companies facing higher levels of credit constraints and firms in polluting industries. Additionally, managerial shortsightedness weakens the sustainable value of national spirit, while external media ESG attention and regional ESG governance efforts further strengthen this effect. Furthermore, different dimensions of national spirit exhibit varying impacts on corporate ESG performance.Practical implicationsThis study provides new insights for promoting sustainable development systems in emerging economies and understanding the role of national spirit in corporate social responsibility investments.Originality/valueThis paper shifts the study of national spirit from macro-level cultural analyses to a micro-level perspective. It bridges gaps in the literature by providing empirical evidence on the role of national spirit as a soft resource that influences corporate financial behavior and employee morale. This study provides new insights into promoting sustainable development systems in emerging economies and understanding the role of national spirit in corporate social responsibility investments.

THE IMPACT OF SUSTAINABILITY ON FIRM PERFORMANCE AND THE ROLE OF INDUSTRY IN THIS RELATIONSHIP

The aim of this paper is to investigate the impact of sustainability on firm performance, along with the moderating role of industry in this relationship. While earlier work has examined the effect of sustainability on firm performance, whether the impact of firms’ sustainability efforts on firm performance differs depending on the industry has largely been ignored. This paper aims to fill this research gap by considering the relations between sustainability, firm performance and industry. The firm level data are obtained from Public Disclosure Platform. The hypotheses are tested using hierarchical ordinary least squares (OLS) regression. The findings show that sustainability has a positive impact on firm performance. However, industry does not moderate the relationship between sustainability and firm performance. This study aims to advance the prior research on sustainability by examining whether firms’ sustainability practices enhance their performance, and whether industry has an impact on this relationship in an emerging economy.

Legal Trends in the Analysis of Air Cooperation Contracts

Since it impacts airlines' capacity to sustain their capacities in the aircraft sector market, air cooperation and its different processes are regarded as significant issues at the level of air transport firms. Furthermore, the legal aspect of these alliances is given a lot of attention due to the various legal interferences of the countries whose airlines are part of the alliance. This adds a legal complexity to the contracts that are concluded, especially since these alliances deal with companies that are nationals of different countries. These international commercial contracts are unique in two ways: first, they are connected to the transportation sector market and the significant changes that always take place in it because of their relationship with governments and international agreements; second, they are connected to businesses that have strong economic capabilities that set them apart from others. Importance of the research: The research's significance lies in creating a concept for these air alliances for the Iraqi transport industry, determining how closely they relate to the financial aspects of transport companies, examining the key mechanisms used in this collaboration, and thoroughly identifying the most significant of these alliances. Research Problem: The lack of organizational plans and internal instructions for the transportation sector and Iraqi Airways to reach organizational mechanisms that would contribute to their entry into these air cooperations.

Social responsibility and corporate borrowing

We study the impact of social capital, measured by corporate social responsibility (CSR) performance, on corporate borrowing. Using a sample of 120,204 bank loan applications of China's listed firms, we find that an increase in CSR performance increases the loan amounts of approved loans, although it does not alter the likelihood of loan approval. Using aggregate loans at the firm level, we show that CSR performance positively impacts firms' long-term borrowing from banks but does not affect their short-term borrowing. The economic magnitude of the positive effect is large at both the loan and firm levels. We attribute this positive relationship to reduced information asymmetry and improved risk mitigation. Surprisingly, we find that banks do not discipline their borrowers' CSR investments through the lending relationship. Specifically, when borrowers exhibit high CSR performance and borrow from banks with high CSR performance, further increases in CSR no longer correlate with larger loan amounts. Our findings suggest that China's state-led green credit policies should be more market-oriented.

Adoption of digital transformation from a firm’s creation to decline: the role of China’s mass entrepreneur and innovation campaign

Following the global economy’s shift toward a digital-based system, the significance of digital transformation (DT) at the firm level has become increasingly important. Accordingly, this study aims to enhance understanding of a firm’s DT by examining the varying impacts ofirm life cycle (FLC) stages on DT adoption. We consider the impact of the mass entrepreneur and innovation campaign (MEIC) on this relationship. Based on the data of China A-share non-financial companies listed on the Shanghai and Shenzhen stock exchanges from 2010 to 2020. The baseline findings reveal that firms in the growth stage are likelier to adopt DT than firms in the introduction and decline stages; however, DT adoption in the maturity stage is uncertain. MEIC encourages DT adoption during the introduction, maturity, and decline stages. Furthermore, the univariate test demonstrates a relative enhancement in DT after implementing MEIC, underscoring its role in effectively allocating resources within the firms to embrace DT. This study’s results are robust across various estimation techniques and instrumental variables. The empirical results offer insights into policy implications, highlighting the factors shaping firms’ DT adoption decisions at different FLC stages and endorsing resource-based and agency theories.

Not that simple: unraveling contingent factors linking firm R&D investment and patenting performance

PurposeExisting research suggests a positive relationship between firms’ research and development investments (RDIs) and their patenting performance (PP) according to assumptions of linear productivity and homogeneous behavior. This study unravels the RDI–PP relationship by taking a strategic view to reveal its underlying mechanisms.Design/methodology/approachWe study the effects of firms’ RDI on PP in the context of China’s listed firms in 16 patent-intensive industries, including the pharmaceutical, computer communication, electronic equipment and electrical machinery and equipment manufacturing industries. To test our hypotheses, we use panel data from 2010 to 2017. We apply generalized estimating equations to estimate our models.FindingsThe study finds an inverted U-shaped relationship between RDI and PP that arises from the transition of innovation portfolios and the strategic balancing of patenting costs and benefits. The study further examines two contingencies: (1) top management team (TMT) education level and (2) TMT compensation. It shows the turning point of the inverted U-shape shifts to the right when TMT education level is high; the curve flattens when TMT education level and TMT compensation are high.Originality/valueWe contribute to literature on innovation and appropriability strategy in three ways: First, we reveal the underlying mechanisms of the inverted U-shaped relationship between RDI and PP. Second, because previous research on appropriability strategies pays little attention to how innovation portfolios influence patenting decisions at the firm level, we provide evidence and insights on how the tension between exploitative and explorative innovations affects appropriability strategies. Third, we connect appropriability strategy literature with two streams of literature: corporate governance and upper-echelon theory.

A configurational approach to strategic change in family firms

ABSTRACT Strategic change is essential for an organization’s long-term performance and survival. Research has investigated how governance structures, organizational values, capabilities, and firm size, in isolation from one another, influence family firms’ strategic change, yet insights in family firm literature suggest the need to examine the fit among these dimensions. We employ a configurational approach and a framework built from models of fit in family firm literature to examine the interdependence among these dimensions. Using a primary dataset of 275 Belgian private family firms and fuzzy-set qualitative comparative analysis (fsQCA), we identify six configurations leading to high levels of strategic change and three configurations explaining low levels of strategic change. This study contributes to the literature by advancing our understanding of how multiple interdependent dimensions, namely, governance structures, organizational values, capabilities, and firm size, combine to better explain strategic change levels in family firms. The findings also provide concrete formulas for practitioners to create a fit among specific factors in these dimensions to promote strategic change.

Effects of Bank Capital and Lending on Leverage, Risk, and Growth of Nonfinancial Firms

ABSTRACTThis paper examines the impact of bank capital on the capital structure of nonfinancial firms, focusing on lenders and commercial borrowers from 2000 to 2019. We find a positive relationship between firm leverage and bank capital, with lending serving as a key channel for this effect. Additionally, increased lending is associated with higher firm risk and slower growth. Our deal‐level analysis reveals consistent findings with those at the firm level: greater lending is linked to higher spreads, more tranches, more secured loans, fewer lenders per deal, and longer maturities, all of which indicate increased borrower risk. This study offers new insights into how bank capital structure policies influence the financial structure of nonfinancial firms and contributes to the broader debate on the spillover effects of risk‐reduction measures in the financial sector, such as capital regulation, on the real economy.

The artificial intelligence impact on Russian labor market

The paper studies the association between the artificial intelligence (AI) and employment characteristics. As a theoretical framework, we use the Acemoglu et al. model, which introduces opposing effects of the AI algorithms on labor employment on the firm level such as substitution effect and complimentary/ productivity effects. Depending on their relative strength, the AI algorithms may both decrease and increase employment. The overall effect is estimated using the data on 3.5 million of vacancies for about 35 thousand firms published up to 2022 spring on the HeadHunter website. According to the results, the existence of tasks realizable using AI is consistent with a higher AI employment, which implies the substitution effect. The other, less intuitive, result is that the same tasks suggest a higher non-AI employment, supports complimentary/productivity effects. The overall employment effect is positive as follows from the positive AI tasks—total employment association.

Are companies responding to minimum wage increases by reducing corporate social responsibility?

Corporate social responsibility (CSR) has been widely discussed. However, the existing literature does not delve into the theoretical mechanism to show how companies adjust their CSR in the face of minimum wage increases. This may be due to the lack of a theoretical framework that clarifies the relationship between minimum wage increases and CSR adjustments. The objectives of this study is to fill this gap by investigating the impact of minimum wage increases on CSR, employing both cost stickiness and optimal distinctiveness theories. We use the data from the CSMAR database, the Human Resources and Social Security Administration, and Hexun rating system. The subject of this study is China’s A-share listed companies during 2010–2020. This study employs fixed-effects models for a panel data. The findings reveal that minimum wage increases are significantly associated with a reduction in both strategic CSR and responsive CSR. Notably, the decrease in responsive CSR outweighs that of strategic CSR. Furthermore, our results indicate that customer concentration or CSR sensitivity significantly moderates this relationship. More particularly, firms with higher customer concentration are less responsive to minimum wage increases in their CSR activities. Firms with higher sensitivity in CSR are more likely to mitigate the reducing effect of the minimum wage on CSR. By revealing how minimum wage increases affect CSR and its economic consequences, our study provides scientific recommendations for policymakers to measure the impact of minimum wage policies at the firm level.

A path towards sustainability through the circular economy phenom: indicators from the Spanish agri-food sector

PurposeThis study aims to propose a comprehensive framework for assessing circular economy (CE) performance in the agri-food sector. It identifies those indicators that should be used to measure circularity regarding CE strategies, applies them at a microeconomic level and examines the impact of key business determinants (financial, internalization, knowledge, awareness and digitalization).Design/methodology/approachA literature review was conducted with a focus on CE strategies and related indicators. The framework obtained is applied on a Spanish agri-food sector survey to provide an empirical CE analysis at firm level. A partial least squares based-structural equation modelling method is applied.FindingsThe research suggests a set of circularity indicators to assess CE strategies at micro level. The findings reveal the heterogeneity of CE sub-indicators related to narrowing, slowing, closing and regenerating strategies. It also highlights the strong effects that the drivers tested have on CE, especially awareness and knowledge.Practical implicationsThis study provides a framework that can guide public policies and business decisions in sectors with significant environmental impacts. It provides a conceptual framework that explains which CE indicators should be considered by governments and regulators when developing policies that seek to promote circular strategies.Social implicationsIn the case of companies, the results show that acquiring more environmental awareness and knowledge is essential for promoting more sustainable work habits that enhance CE.Originality/valueThe paper offers a novel contribution to the CE literature by introducing a multidimensional indicator framework comprehensively applied to the agri-food sector, integrating miscellaneous pillars of circular strategies and business determinants.

Ex-Military Commissioners and Firm Performance: The Case of Indonesia Manufacturing Companies

This investigation relates to the new corporate governance (CG) suggestions that using ex-military commissioners can lead to better firm performance. Quantitative analysis was used to analyze the sample of manufacturing sector public companies. The data comprised 906 firm-years (from 2016 to 2021). This study shows that companies whose CG practices involve employing ex-military officers exhibit high firm performance levels. This study emphasizes the value of using a configurational analytical approach to explore firm jointly- and country-specific CG practices that engage firms to achieve the necessary level of performance. The current study calls policymakers’ attention to evalu- ating the current state of regulatory and competitive development in their countries and establishing policies in line with that assessment. The methodology provides connec- tions between firm performance and CG with retired military commissioners. This study broadens the focus of CG studies to provide effective solutions for practitioners, especially Indonesian manufacturing firms. It also highlights the importance of ex-military commis- sioners in a particular company sector and CG procedures specific to a particular nation. It encourages enterprises to reach the desired level of performance. The research impli- cation relates to good governance in board diversity using ex-military as independent commissioners for supervisory roles.

Do Supply Chain Pressures Affect Consumer Prices in Major Economies? New Evidence from Time-Varying Causality Analysis

This study explores the dynamic causality between the consumer price index and supply chain pressure index in two large economies. Despite extensive research into the role of supply chains at the firm level, literature on their impact on time-varying inflation and macroeconomic stability is scarce. Using data from the United States and the European Union from January 2000 to December 2021, we employ novel time-varying causality techniques to examine the evolving relationships among inflation, supply chains, real gross domestic product, interest rates, and oil prices. Our findings show that supply chains have a significant dynamic relationship with consumer prices, particularly during economic crises like the 2008 global financial crisis and the COVID-19 pandemic. Robustness tests including impulse response functions and the autoregressive distributed lag model confirm this causality. These results are critical for policymakers, emphasizing the importance of supply chains in controlling inflation and achieving global economic resilience and stability.

Integrated reporting in China: a mission approach

PurposeDrawing on a mission approach, this study investigates the application of integrated reporting (IR). It also explores its role in shaping organisations' internal processes in Chinese state-owned enterprises (SOEs) and the China General Nuclear Power Corporation (CGN).Design/methodology/approachWe employed a case study method and collected data by conducting semi-structured interviews with CGN managers and analysing their reports and appropriate documents.FindingsOur findings reveal that the CGN is motivated by its mission and vision to adopt IR rather than by other common motivations, such as legitimacy, strategy and stakeholder pressure. IR practice contributes to implementing its mission and vision through direct and indirect methods, covering the changes in design archetypes and subsystems that meet the nature of reorientation changes that belong to first-order transition.Research limitations/implicationsThis study extends empirical evidence of IR at the firm level in China and provides in-depth insights into how IR is implemented in Chinese SOEs. Our findings may be helpful for policymakers to review and develop policies. For instance, the government might consider integrating IR frameworks into current reporting and mandate listed companies to adopt IR. However, our data are from one company, the only Mainland Chinese Company recognised by the IIRC database.Originality/valueThis study provides an innovative approach to analysing IR and offers managers insight into how IR practice benefits the mission’s implications.

Digitalization Intensity and Extensive Margins of Exports in Manufacturing Firms from 27 EU Countries - Evidence from Kernel-Regularized Least Squares Regression

The use of digital technologies like artificial intelligence, robotics, or smart devices can be expected to go hand in hand with higher productivity and lower trade costs, and, therefore, to be positively related to export activities. This paper uses firm level data for manufacturing enterprises from the 27 member countries of the European Union to shed further light on this issue by investigating the link between the digitalization intensity of a firm and extensive margins of exports. We use a new machine-learning based regression method, Kernel-Regularized Least Squares (KRLS), which effectively handles non-linear relationships in models and does not impose any restrictive assumptions for the functional form of the relation between margins of exports, digitalization intensity, and any control variables. We find that firms which use more digital technologies do more often export, do more often export to various destinations all over the world, and do export to more different destinations.