every little helps esg news and stock market reaction stories about corporate social responsibility have become very frequent over the past decade and managers can no longer ignore their impact on firm value in this paper we investigate the extent and the determinants of the stock market s reaction following ordinary news related to environmental social and governance issues the so called esg factors to that purpose we use an original database provided by covalence ethicalquote our empirical analysis is based on about 33 000 esg news positive or negative targeting one hundred listed companies over the period 2002 2010 on average firms facing negative events experience a drop in their market value of 0 1 whereas companies gain nothing on average from positive announcements we find also that market participants are responsive to the media but they do not react to firms press releases or to ngos disclosures moreover our results indicate that sector s reputation mitigates the loss the goodwill hypothesis and that cultural proximity and lexical contents of esg disclosures play a significant role in the magnitude of the impact

opium in afghanistan prospects for the success of source country drug control policies abstract recent estimates suggest that in 2007 afghan opiate production accounted for about 93 percent of the world s total this article presents a framework for estimating the potential for source country drug control policies to reduce this production it contains a first pass at estimating the potential for policy to shift the supply of opium upward as well as a range of supply and demand elasticities the estimates suggest that meager reductions in production can be expected through alternative development programs alone reductions are less than 6 5 percent in all but one of the specifications presented they also suggest that substantial increases in crop eradication would be needed to achieve even moderate reductions in production reductions range from 3 0 percent to 19 4 percent for various specifications the results also imply that all else being equal the cessation of crop eradication would result in only modest increases in opiate production with estimates ranging from 1 6 percent to

sincerity in corporate philanthropy stakeholder perceptions and firm value this study extends the literature on symbolic management by incorporating the role of stakeholder perceptions into the context of corporate philanthropy in particular we differentiate between the quantitative generous giving and qualitative innovative giving aspects of giving we argue that although stakeholders may perceive both types of giving as being substantive rather than symbolic innovative giving is likely to be perceived as more substantive than generous giving is and thus has a greater impact on firm value furthermore stakeholder perceptions of corporate philanthropy as being more symbolic or substantive are influenced by firm characteristics the type of products or services that a firm provides and the life cycle stage that the firm is in which provide stakeholders with a context to better assess the nature of a firm s philanthropic actions and the substantiveness of its giving we find support for our predictions using a sample covering u s firms philanthropic activities over a 19 year period

anomalies risk aversion economists ubiquitously employ a simple and elegant explanation for risk aversion it derives from the concavity of the utility of wealth function within the expected utility framework we show that this explanation is not plausible in most applications since anything more than economically negligible risk aversion over moderate stakes requires a utility of wealth function that is so concave that it predicts absurdly severe risk aversion over very large stakes we present examples of how the expected utility framework has misled economists and why we believe a better explanation for risk aversion must incorporate loss aversion and mental accounting

estimating the causal effect of forced eradication on coca cultivation in colombian municipalities summary colombia has aggressively pursued forced coca eradication to reduce the amount of land that agricultural households devote to illegal crops however few rigorous empirical studies have assessed its causal effect on land allocation decisions i use a 6 year panel covering the entire country for the years 2001 06 to estimate this effect i instrument eradication with changes in the expected cost of protecting eradication crews as they get far from the airports used as a point of departure estimates show the causal effect of a 1 increase in eradication to be approximately a 1 increase in coca cultivation

corporate philanthropic giving advertising intensity and industry competition level this article examines whether the likelihood and amount of firm charitable giving in response to catastrophic events are related to firm advertising intensity and whether industry competition level moderates this relationship using data on chinese firms philanthropic response to the 2008 sichuan earthquake we find that firm advertising intensity is positively associated with both the probability and the amount of corporate giving the results also indicate that this positive advertising intensity philanthropic giving relationship is stronger in competitive industries and firms in competitive industries are more likely to donate this study thus provides evidence suggesting that even in the wake of catastrophic events corporate philanthropic giving is strategic

international narcotics trade foreign aid and enforcement i introduction it is widely accepted that the problems that a country may face as a direct result of narcotics related activities are numerous 1 moreover drug production and trade are intimately tied to other serious international concerns notably the financing of insurgencies and terrorist activities shughart 2006 keefer loayza and soares 2008 intriligator 2010 piazza 2011 a prime example is the involvement of the taliban in afghanistan in the production and trafficking of heroin see blanchard 2009 clemens 2013a 2013b similar issues are observed in colombia and mexico hence the indirect costs of narcotics related activities are also substantial nonetheless the enforcement of prohibitions on the production consumption and movement of narcotics remains among the most controversial issues in international relations not least because the global response has met with somewhat limited success 2 even taking the objective of reducing global consumption of narcotics as given it is unclear which of the available policy tools are likely to be the most effective at meeting the objective the consumption and distribution in narcotics importing countries can be targeted directly although the history of the past one and a half centuries indicates that it is very difficult alternatively and more realistically the supply side can be targeted law enforcement authorities in narcotics exporting countries can be used to eradicate production facilities and to interdict trafficking and alternative production activities can be encouraged by providing technical assistance or by direct subsidization in all cases involving the supply side however it must be recognized that the global production of narcotics is concentrated in developing economies many of these countries lack the enforcement resources to engage effectively against well funded producers and well armed traffickers and their supporting terrorist and rebel groups therefore foreign aid to finance law enforcement activities is essential 3 alternative development policies may also be supported through foreign technical assistance or by directing foreign aid toward alternative production subsidies the effects of these policies on narcotics exporting economies have not however been adequately addressed in the literature our work adds a new dimension to the existing literature on the economics of narcotics 4 we construct a theoretical model that explores the effects of foreign financing of anti narcotics enforcement activities in narcotics producing exporting countries along with other potential policy interventions while previous literature has taken a partial equilibrium approach to analyzing related issues our work differs substantially in adopting general equilibrium methods as martin and symansky 2006 note opium production in afghanistan for example accounted for approximately 27 of economic activity in 2005 2006 given this fact substantial general equilibrium effects must be present and deserve full exploration we focus attention on the consequences of the multitude of severe distortions that narcotics production and enforcement introduce to factor markets we envisage an economy where workers engage in both licit and illicit activities are paid a premium for the risk of incarceration or seizure of their marginal product involved in the latter and a nonproductive law enforcement sector uses real resources to combat illicit activity our work draws on a number of strands of economic theory including tied aid factor market distortions dual economies illicit markets and law enforcement a number of important new results emerge from our analysis foreign aid will increase enforcement activity and will generally lower narcotics production the more market power the narcotics producing country has the less effective foreign aid will be however in fact aid intended for anti narcotics enforcement may effectively be siphoned into the wages of narcotics workers

shareholder value stakeholder management and social issues what s the bottom line we test the relationship between shareholder value stakeholder management and social issue participation building better relations with primary stakeholders like employees customers suppliers and communities could lead to increased shareholder wealth by helping firms develop intangible valuable assets which can be sources of competitive advantage on the other hand using corporate resources for social issues not related to primary stakeholders may not create value for shareholders we test these propositions with data from s p 500 firms and find evidence that stakeholder management leads to improved shareholder value while social issue participation is negatively associated with shareholder value copyright 2001 john wiley sons ltd

strategic corporate philanthropy addressing frontline talent needs through an educational giving program corporate philanthropy describes the action when a corporation voluntarily donates a portion of its resources to a societal cause although the thought of philanthropy invokes feelings of altruism there are many objectives for corporate giving beyond altruism meeting strategic corporate objectives can be an important if not primary goal of philanthropy the purpose of this paper is to share insights from a strategic corporate philanthropic initiative aimed at increasing the pool of frontline customer contact employees who are performance ready while supporting curriculum development and infrastructure improvement for selected university business programs creating a win win situation for the company and the universities this paper will address three objectives first we will examine the evolution of strategic philanthropy from the traditional view to its current position as a strategic option second we will address the recruitment of front line talent needs customer facing jobs in sales customer service and marketing based on the profit maximization model of strategic philanthropy finally we will offer conclusions and issues for future research

the value of corporate philanthropy during times of crisis the sensegiving effect of employee involvement recent research suggests that philanthropy s value to the firm is largely mediated by contextual factors such as managers assumed motives for charity our article extends this contingency perspective using a sensegiving lens by which external actors interpretations of organizational actions may be influenced by the way in which the organization communicates about those actions we consider how sensegiving features in philanthropy related press releases affect whether investors value those donation decisions for the empirical investigation in this study we analyze abnormal returns to announcements by u s fortune 500 firms documenting their donations to hurricane katrina disaster relief in 2005 we expect that in general donation decisions would be controversial given the uncertainty surrounding the hurricane s economic effects at the time however we also propose that announcements emphasizing employee involvement in the donation send investors positive signals about the firm s ability to bounce back from the disaster s adverse effects we find empirical support for the proposed hypotheses and discuss the implications for theory and practice

valuation effect of emotionality in corporate philanthropy despite receiving a great deal of research attention the effect of corporate philanthropy on shareholder value remains inconclusive to address this issue the present paper examines emotionality as an important factor based on which investors infer about the firm s motive as well as the beneficiary s worthiness and react accordingly consistent with attribution theory our event study shows that announcements with more emotional expressions are associated with higher cumulative abnormal stock returns and the effect is stronger when investor attention is greater we further find that the positive interaction effect between emotionality and investor attention is more pronounced for scandal free firms than for firms with corporate social irresponsibility csi the empirical evidence remains consistent under various robustness tests the paper concludes with implications for future research and managerial practices

does the market value corporate philanthropy evidence from the response to the 2004 tsunami relief effort this study investigates the market reaction to corporate press releases announcing donations to the relief effort following the december 2004 tsunami in southeast asia based on a sample of 79 u s companies results indicate a statistically significant positive 5 day cumulative abnormal return while differences in the timing of the press releases do not appear to have influenced market reactions the amount of the donations did overall the results appear to support godfrey s academy of management review30 777 798 2005 assertion that philanthropic giving must be perceived as being a genuine manifestation of the firm s underlying social responsiveness in order to increase firm value

earnings and employment effects of continuous off the job training in east germany after unification the effects of continuous off the job training oft for east germans after unification are analyzed in terms of their earnings and employment probabilities using the potential outcome approach to causality as general framework different matching procedures are suggested for the estimation they allow for permanent and transitory shocks that influence oft participation and labor market outcomes the matching procedures also take account of individually different starting dates the data are taken from the german socio economic panel gsoep 1990 1994 this dataset is very informative with respect to factors influencing the participation in training the results show no positive effects of training

corporate donations and shareholder value do corporate donations enhance shareholder wealth or reflect agency problems we address this question for a global sample of firms whereby we distinguish between charitable and political donations as well as between donations in cash and in kind we find that charitable donations are positively related to financial performance and firm value which is consistent with the value enhancement hypothesis this positive effect on firm value is stronger for cash than in kind donations in contrast political donations do not appear to enhance shareholder value but rather tend to reflect agency problems as they are higher for firms with poor internal corporate governance and strong managerial entrenchment we address endogeneity concerns by using peer firms donations as an instrument in a two stage least squares 2sls setting and by conducting a difference in difference analysis around a general election

corporate contributions altruistic or for profit existing literature has focused on three rationales for corporate philanthropy through the firm giving corporate statesmanship and profit motivated giving the profit motivation argument was exa

subsidization and stabilization optimal employment policy under aggregate uncertainty the authors study an economy where externalities provide an explicit role for intervention and technology shocks generate aggregate uncertainty in laissez faire there is too much unemployment however the authors show how to support the optimal allocation as a decentralized equilibrium using a self financing linear employment subsidy generally this subsidy is a function of economic conditions and they characterize the way in which it varies with the shock a special case of the authors results indicates that a simple restriction on technology homotheticity implies the optimal subsidy is constant or independent of unemployment copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

corporate reputation and philanthropy an empirical analysis this paper analyzes the determinants of corporate reputation within a sample of large uk companies drawn from a diverse range of industries we pay particular attention to the role that philanthropic expenditures and policies may play in shaping the perceptions of companies among their stakeholders our findings highlight that companies which make higher levels of philanthropic expenditures have better reputations and that this effect varies significantly across industries given that reputational indices tend to reflect the financial performance of organizations above other factors fryxell g e and j wang 1994 journal of management 20 1 14 and that elements of the literature emphasise that discretionary aspects of social responsibility including corporate donations may not be in the financial interests of organizations e g friedman m 1970 the social responsibility of business is to increase its profits new york times magazine september 13 this is a significant finding it suggests that philanthropic expenditures may play a significant role in stakeholder management and may in particular lead to stakeholders holding more positive impressions of philanthropic corporations

the social construction of market value institutionalization and learning perspectives on stock market reactions this study advances a social constructionist view of financial market behavior the paper suggests that the market s reaction to particular corporate practices such as stock repurchase plans are not as financial economists contend simply a function of the inherent efficiency of such practices rather stock market reactions are also influenced by the prevailing institutional logic and the degree of institutionalization of the practice the theory first predicts that the emergence of the agency perspective on corporate governance in the mid 1980s represented a powerful new institutional logic that would lead the market to reverse its prior aggregate reaction to stock repurchase plans in the united states the paper then considers the potential for institutional decoupling of repurchase plans and develops competing hypotheses about how the market value of these policies might have changed as more firms formally adopted but did not implement the plans over time in contrast to a financial economic pers

a normative argument for independent voice and labor unions the paper argues that an ethical firm has cause to realize and to respect in good faith the decision of workers regarding labor unions and proceeds along the following lines first the employer is due appropriate deference the bounds of which should be determined in conjunction with employees as they are the most closely affected party second employee preferences for defining the employment relation and appropriate deference are best reflected through autonomous voice third autonomous voice is assured by the right to free association and generally achieved through labor unions fourth because employment is so important to a dignified existence an economically just system of employment requires respect for workers choice regarding labor unions and fifth there are concerns and contradictions that arise from labor union operations but they do not justify impeding a morally valid prerogative

counterproductive counternarcotic strategies we model the economic incentives surrounding opium poppy cultivation in afghanistan specifically we examine the impact of eradication policies when opium is used as a means of obtaining credit and when the crops are cultivated in sharecropping arrangements the analysis suggests that when perfect credit markets are available an increased risk of eradication will lead to less land being allocated to opium poppy however when opium is used as a means of obtaining credit an eradication policy can rather increase land under poppy cultivation furthermore the unintended effects of eradication can be augmented in sharecropping arrangements

the econometrics of nonlinear budget sets traditional empirical analysis of consumer demand has usually made the assumption of linear budget sets that is the consumer is assumed to purchase any desired quantity at a constant price subject to a budget constraint the major exception to this framework is the analysis of demand when some goods are rationed 2 in the rationed case the price is constant up to a quantity limit in contrast to the rationed case here i consider the situation where the price varies with the amount of the good purchased empirical situations with nonconstant prices come readily to mind and of course they have received much recent attention from theorists since mirrlees 44 paper on optimal nonlinear taxation the following examples are meant to give a partial listing of cases when nonlinear budget sets occur i electricity prices many electric utilities engage in declining block pricing that is the marginal price of successive kwh s of electricity decrease at a given number of points determined by total demand thus the budget set is piecewise linear houthakker 36 was the first to propose an approach to this problem taylor 51 analyzes the problem at length and hausman kinnucin and mcfadden 31 use an instrumental variables estimator to provide consistent estimates of the demand function

heroin consumption prices and addiction evidence from self reported panel data estimation models of drug demand should encompass the aspect of addiction here we consider two static panel data regression models and two cross section models with lags or leads in drug consumption as additional regressors heroin injectors attending a needle exchange service in oslo were interviewed twice with a one year interval despite our relatively small sample we obtain statistically significant price and income responses for nearly all of the models and specifications applied the sample is split by dealing status with dealers obtaining price elasticities in the range of 0 15 1 51 and non dealers 0 71 1 69 somewhat surprisingly the estimates of the variance of the latent individual specific variable are rather low in the panel data models although higher for non dealers than for dealers

income and livelihoods in the war in afghanistan we explore the impact of the insurgency and military deployment on the livelihoods of local communities in afghanistan we use monthly wages and commodity prices at the provincial level over the period 2003 09 and look for their response to conflict events and isaf deployment overall we find that prices are more sensitive to deployment than to attacks commodity prices are not significantly affected by insurgent violence which is consistent with coping strategies already in place on the opposite military deployment is associated with an increase in the levels of wages and commodity prices as isaf is a new source of uncertainty

modeling farmers response to uncertain rainfall in burkina faso a stochastic programming approach farmers on the central plateau of burkina faso in west africa cultivate under precarious conditions rainfall variability is extremely high in this area and accounts for much of the uncertainty surrounding the farmers decision making process strategies to cope with these risks are typically dynamic sequential decision making is one of the most important ways to cope with risk due to uncertain rainfall in this paper a stochastic programming model is presented to describe farmers sequential decisions in reaction to rainfall the model describes farmers strategies of production consumption selling purchasing and storage from the start of the growing season until one year after the harvest period this dynamic model better describes farmers strategies than do static models that are usually applied this study draws important policy conclusions regarding reorientation of research programs and illustrates how operations research techniques can be usefully applied to study grass root problems in developing countries

event studies in management research theoretical and empirical issues we examined the use of event studies in management research and found that there was inadequate attention paid to theoretical and research design issues this lack of attention may lead to false in

social responsiveness profitability and catastrophic events evidence on the corporate philanthropic response to 9 11 in this study we seek to determine whether catastrophic events lead to corporate charitable giving unrelated to levels of firm profitability we examine the issue relative to the corporate philanthropic response to the 9 11 terrorist attacks of 2001 based on a sample of 489 fortune 500 companies we find that differences in the extent of corporate contributions following 9 11 are positively and significantly associated with differences in firms profitability further while the degree of connection to the catastrophic event led to higher levels of giving in comparison to the contributions of less connected firms differences in the extent of philanthropy are still related to short term profitability for the more connected firms the study thus provides evidence suggesting that even in the wake of catastrophic events corporate philanthropic giving is constrained by economic concerns

an analysis of economic warfare in times of conflict an adversary s resources are a source of potential harm many geopolitical tactics are thus quite explicitly economic as they seek either to deter an adversary s worst intentions or reduce its capacity to inflict damage richardson 1960 tullock 1974 relevant policies include trade limiting sanctions galtung 1967 pape 1997 and direct attacks on an adver sary s military infrastructure or personnel 1 this paper explores a third example namely efforts to undermine an adversary s source of income i focus on us efforts to reduce the resources of taliban loyal insurgents by suppressing the afghan opium trade with additional applications to conflicts involving oil producing nations the taliban historically profited from the opium trade through a 10 percent tax on farmers known locally as ushr and by providing traffickers with protection services this link between opium income and taliban resources coupled with concerns about a narcoticsinsecurity cycle motivates the view that the united states should suppress the afghan opium trade blanchard 2009 caution is warranted

the impact of public scrutiny on corporate philanthropy this paper proposes that a corporation s vulnerability to public scrutiny drives its corporate giving the hypothesis that companies donate for strategic motives is tested against the alternative that they do so for altruistic reasons court cases and news articles were selected as proxies for public scrutiny macroeconomic variables were used to gauge the level of public charitable need and test for altruism through examining the philanthropic behavior of 40 fortune 500 companies over 7 years this paper finds that companies are strategic and altruistic in their giving

why do corporations give to charity this paper explores whether corporate contributions should be tax dedu ctible within the more general context of an examination of the profi t and utility maximization motives driving contributions the theoret ical section develops a formal structural model of the contributions process illustrates comparative statics and derives a set of empiri cally testable hypotheses using a new source of firm data the empir ical results indicate that profit maximization is an important motive driving contributions this finding supports the current tax deducti ble status of contributions up to a seldom encoun tered ceiling and favors a reform that allows firms to treat contributions as ordinary business expenses copyright 1988 by the university of chicago

the macroeconomic merits of a marginal employment subsidy recent projections by the institute for employment research show that high levels of unemployment are likely to persist throughout the remainder of the decade with this in mind it is relevant to consider the relative merits of alternative policy measures designed to improve the situation and in an article in this journal layard and nickell i980 have proposed a marginal employment subsidy on the basis of a simple algebraic model of the economy this paper presents a further assessment of this type of marginal employment subsidy highlighting the various key assumptions necessary for it to be effective the essence of the marginal employment scheme outlined by layard and nickell henceforth ln is that firms would be entitled to receive a subsidy for each additional job created above a given reference level of employment their method of analysis is to set up an algebraic model using a set of plausible parameters they use three alternative sets of parameters which they term pessimistic reasonable and optimistic and their results show that the relative efficacy of the mes scheme depends very much on which set is most plausible they conclude that their analysis provides some support for a marginal employment subsidy and that it compares quite favourably with alternative means of stimulating employment and in particular with the policy of a general employment subsidy they justify their algebraic approach as follows