Implications for business and investors
Author Zeeshan Shaikh
Do Socially Responsible Funds Actually Deliver What They Promise?
SCHEPERS & SETHI (2003) the growth of Socially Responsible Investing (SRI) and its focus on corporate social responsibility. The research raises concerns about the lack of clear definitions and precision in SRI funds, making it challenging to assess their impact. It explores differing opinions on the financial success of SRI funds, with some claiming positive correlations between social responsibility and returns, while opponents argue against this connection. The research emphasises the importance of establishing a well-defined conceptual framework to enhance the credibility and integrity of social/ethical investing.
Socially Responsible Investing (SRI) as a commendable goal, offering investors choices beyond financial performance and influencing corporate conduct based on social preferences. However, it suggests that SRI funds have not fully met the needs of socially responsible investors or significantly influenced private economic institutions. The research calls for a more modest and truthful approach by SRI funds, urging them to avoid a one-size-fits-all portrayal of the “good corporation.” Instead, it proposes the development of a basket of “social choice” funds, allowing individual investors to evaluate companies based on predefined social criteria. This approach aims to increase flexibility, investor confidence, and the social impact of the SRI movement.
Determinants of long-distance investing by business angels in the UK
Harrisona et al (2010) It explores the geographical dispersion of informal venture capital using data from 109 business angels. Findings reveal that technology-oriented ventures, co-investments, and those in London and the South-east are more likely to be local. Larger investments tend to be longer distance. Investor preferences for deal stage and size align with local investments, while active investors and those in syndicated deals make longer distance investments. However, the study indicates no strong encouragement for importing business angel capital, suggesting a sustained drain of risk capital from non-core regions. Further research is recommended to better understand long-distance informal investment dynamics.
The Media and Mispricing: The Role of the Business Press in the Pricing of Accounting Information
Drake et al (2014) research highlights the influential role of the business press in the pricing of accounting information, particularly focusing on earnings components accruals and cash flows. The study finds that press coverage significantly reduces cash flow miss pricing during initial earnings announcements, but has a minimal impact on accrual miss pricing. The research further identifies that the press primarily reduces miss pricing by disseminating information more broadly rather than creating new information. These findings contribute valuable evidence to the understanding of how the business press facilitates efficient integration of accounting information into stock prices, offering insights for market participants and researchers exploring the dynamics of capital markets and accounting-based anomalies.
Addressing Concerns Raised by Critics of Business Schools by Teaching Multiple Approaches to Management
DYCK et al (2011) The research discusses the ongoing debate within management studies regarding concerns about its moral standpoint, self-fulfilling prophecies, and the need for alternative approaches. While some argue for a proactive shift in teaching diverse management perspectives, others assert the benefits of conventional theories. The conclusion emphasises the importance of addressing unintended negative consequences in management education, suggesting that providing alternative approaches may foster ethical thinking and moral responsibility among students. The study aims to investigate how teaching mainstream and multi-stream management influences students’ values and views on effective management practices and measures used.
Voting Engagement by Large Institutional Investors
Suren Gomtsian (2020) The research challenges the common belief that large institutional investors avoid active engagement. It reveals a strengthening trend in shareholder voting engagement by major fund managers, driven by their growing significance as global shareholders. However, the study points out limitations such as the size of asset managers, competitive pressures, and a focus on standardised governance frameworks rather than company-specific monitoring. Imposing unrealistic engagement requirements on large institutional investors is cautioned, as it may undermine their primary goal of delivering returns. Furthermore, the study suggests that distinctions between actively managed and passive funds might matter less than expected in the context of engagement. While many questions on shareholder engagement remain unanswered, future research will explore factors motivating engagement, interactions with shareholder activists, and the influence of common ownership on market behaviour.
Implications of marketing capability and research and development intensity on firm default risk
Wenbin Suna and Joseph M. Price (2016) The prevailing view by demonstrating that marketing capability and R&D intensity significantly influence a firm’s default risk. The study fills a gap in existing literature by exploring the risk implications of R&D intensity and the impact of marketing capabilities on reducing default risk. The research employs resource-based and dynamic capability theories, revealing a U-shaped relationship between R&D intensity and default risk, which is mitigated by superior marketing capability. The study contributes to the understanding of firm risk assessment and emphasizes the crucial link between marketing and finance in minimising cash flow vulnerability. Overall, it sheds light on the controllable and transparent instruments managers can use to effectively manage default risk.
The Financial Performance of Global Information and Communication Technology Companies
Bauer et al (2012) The research investigates the performance of ICT firms from 1998 to 2007, focusing on country-specific factors. The study finds that non-U.S. firms consistently outperform U.S. counterparts, even after considering firm-specific variables. It highlights the impact of country-level financial and competitive factors, such as tax regimes, subsidies, and industry focus, on explaining performance variations. Notably, the study suggests that countries with a more focused industry concentration tend to have higher financial performance. The results have policy implications, emphasising the importance of tax incentives and government subsidies in fostering a favourable environment for the ICT industry. Policymakers, business strategists, and investors are encouraged to consider these findings for informed decision-making.
Corporate Restructuring and Entrepreneurship: What Can Large Organizations Learn from Small?
ALLAN, GIBB (2000) The research addresses the trend towards “smallness” in large firms, emphasizing the importance of smallness in the redesign of large organizations and its connection to entrepreneurial behaviour. It challenges the assumption that restructuring to small has been effectively achieved and argues for the significance of smallness in facilitating entrepreneurial organizational redesign. The paper presents five central propositions supporting the idea that smallness stimulates entrepreneurial behaviour and contributes to the management of large organizations. It also highlights the challenge of managing disaggregated ownership structures in downsizing. Overall, the research aims to provoke debate on the relationship between smallness, entrepreneurship, and organizational redesign in large firms.
Keeping It All in the Family: The Role of Particularistic Relationships in Business Group Performance during Institutional Transition.
Xiaowei Luo and Chi-Nien Chung (2005) The research sheds light on the profitability of business groups in emerging economies, emphasizing the significance of particularistic ties within the social structure of these groups. The study highlights the contextual influence of market transition and institutional environments on the functions and effects of such ties. Furthermore, it suggests that understanding the underpinnings of social relationships is crucial for deepening interorganizational research and calls for a new direction in organization theory, challenging the prevailing “ideal type” of independent corporations. The research underscores the importance of considering both social structure and institutional context in studying business groups for comprehensive theoretical advancement.
Examining the influence of supply chain glitches on shareholder wealth: does the reason matter?
Zsidisin et al (2016) The research delves into the impact of supply chain glitches on shareholder wealth, particularly those leading to production or shipment delays. The study identifies that the reasons behind such glitches play a crucial role in influencing shareholder value, with regulatory, catastrophic, and infrastructural reasons having more severe negative effects compared to supply-side reasons. The findings suggest an evolution in supply chain robustness, as the negative impact on shareholder wealth is less pronounced than in earlier studies. Factors like firm size and debt-equity ratio are identified as significant moderators in this relationship, highlighting the importance of considering various dimensions in understanding the effects of supply chain disruptions. However, the study acknowledges the need for continued efforts in preventing and mitigating supply chain glitches.
Conclusion Across Research Reports:
The studies collectively underscore the complexity and varied dynamics within different aspects of business and finance. From socially responsible investing urging a more truthful approach to long-distance investing presenting challenges and potential drain of risk capital, each research area calls for nuanced strategies. The influential role of the business press in accounting information pricing, the evolving landscape of management education, the changing dynamics of institutional investors’ engagement, and the intricate link between marketing capability, R&D intensity, and firm default risk add layers to our understanding. Additionally, the global performance of ICT companies and the role of smallness in large organizational redesign emphasize the importance of context. Examining supply chain glitches reveals the multifaceted impact on shareholder wealth, with the reasons behind glitches playing a crucial role. These diverse findings collectively contribute to a richer understanding of the intricate interplay within the business and financial realms, suggesting the need for adaptive strategies and continued exploration.
Reference
Schepers, D. H.; & Prakash Sethi, S. (2003). Do Socially Responsible Funds Actually Deliver What They Promise? Business & Society Review (00453609), 108(1), 11-32.
https://doi.org/10.1111/1467-8594.00006
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Drake, M. S.; Guest, N. M.; & Twedt, B.J. (2014). The Media and Mispricing: The Role of the Business Press in the Pricing of Accounting Information, Accounting Review, 89(5),1673-1701. https://doi.org/10.2308/accr-50757
Dyck, B.; Walker, K.; Starke, F. A.; & Uggerslev, K. (2011). Addressing Concerns Raised by Critics of Business Schools by Teaching Multiple Approaches to Management. Business & Society Review (00453609), 116(1), 1-27. https://doi.org/10.1111/j.1467-8594.2011.00375.x
Gomtsian, S. (2020). Voting Engagement by Large Institutional Investors, Journal of Corporation Law, 45(3), 659-714.
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Gibb, A. (2000). Corporate Restructuring and Entrepreneurship: What Can Large
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Xiaowei Luo, & Chi-Nien Chung. (2005). Keeping It All in the Family: The Role of Particularistic Relationships in Business Group Performance during Institutional Transition. Administrative Science Quarterly, 50(3), 404-439 https://doi.org/10.2189/asqu.2005.50.3.404
Zsidisin, G. A.; Petkova, B. N.; & Dam, L. (2016). Examining the influence of supply chain glitches on shareholder wealth: does the reason matter? International Journal of Production Research, 54(1), 69-82. https://doi.org/10.1080/00207543.2015.1015751