do firms differ much with finn profitability data for a cross section of geographic markets it is possible to determine the relative importance of firm and market effects on profitability analysis of variance from a panel of multihank holditig companies in texas suggests that finn effects are more important than market effects in determining profitability and that the magnitudes of the effects vary over time in a 1985 article schmalensee takes a new approach to analysis of the structure conduct performance paradigm schmalensee chooses a purely descriptive approach to distinguish among the classical tradition of bain 1956 which takes markets as the basic unit of analysis with a particular focus on market concentration the revisionist views of demsetz 1973 and peltzman 1977 who view the observed relation between profitability and concentration as reflecting underlying inter firm profitability differences and the managerial view that profitability is determined by firm wide management practices but not necessarily by differences in market share this descriptive approach has two advantages over a structural analysis a descriptive analysis avoids imposition of the troublesome maintained hypotheses inherent in structural models further as scott and pascoe 1986 point out the explanatory power of structural models is generally only a small fraction of that of descriptive models

the speed of the invisible hand abstract very little attention has been devoted to incorporating dynamic elements into empirical models of market structure and performance consequently there has been little progress in settling the issue of whether the market structure profits relationship is more than just a temporary phenomenon in this study an estimation equation is developed which allows for incomplete adjustment of past profits from expected future profits where expected profits depends on present and expected future changes in market structure the model is estimated pooling panel data across industries the findings indicate that adjustment to abnormal profits is relatively quick market share adjustments are non instantaneous and that inclusion of industry specific effects is important the results suggest that previous studies are susceptible to specification bias from omitted variables

sustainable development and corporate performance a study based on the dow jones sustainability index the goal of this paper is to examine whether business performance is affected by the adoption of practices included under the term corporate social responsibility csr to achieve this goal we analyse the relation between csr and certain accounting indicators and examine whether there exist significant differences in performance indicators between european firms that have adopted csr and others that have not the effects of compliance with the requirements of csr were determined on the basis of firms included in the dow jones sustainability index djsi and specific accounting indicators were applied to measure performance for the purposes of this study we selected one group of firms belonging to the djsi and another comprised of firms quoted on the dow jones global index djgi but not on the djsi the sample was made up of two groups of 55 firms studied for the period 1998 2004 empirical analysis supports the conclusion that differences in performance exist between firms that belong to the djsi and to the djgi and that these differences are related to csr practices we find that a short term negative impact on performance is produced

omega performance measure and portfolio insurance abstract we analyze the performance of the two main portfolio insurance methods the obpi and cppi strategies using downside risk measures for this purpose we introduce kappa performance measures and especially the omega measure these measures take account of the entire return distribution we show that the cppi method performs better than the obpi as a by product we determine the set of threshold values for these risk reward performance measures

firms markets and the state institutional change and manufacturing sector profitability variances in india we assess absolute magnitudes relative importance and intertemporal differences in firm industry and business group effects in explaining the variance of indian manufacturing firms profitability over the 26 year period between 1980 1981 and 2005 2006 we stratify the data by institutional phases to place emphasis on the role of changing institutional factors in an emerging economy first as a regime of command and control transits to partial liberalization between 1985 and 1991 and then to an open competitive market economy after 1991 thereafter financial reforms occur followed by legal reforms we find that liberalization significantly affects and alters the relative importance of firm industry and group effects firm effects are always important whether in a command and control regime with benefits accruing from protectionism and political rent seeking or in liberalized periods where firm specific capabilities and dynamic efficiencies are valued industry effects are significant in the command and control regime when mandatory sector placement benefits firms in industries with superior profits and in the liberalized period when the choice of the industry segment in which to operate is open to firms thereafter industry effects dissipate business group effects matter in explaining profitability variances group effects magnitudes however do not change significantly over time

nonlinearly weighted convex risk measure and its application abstract we propose a new class of risk measures which satisfy convexity and monotonicity two well accepted axioms a reasonable and realistic risk measure should satisfy through a nonlinear weight function the new measure can flexibly reflect the investor s degree of risk aversion and can control the fat tail phenomenon of the loss distribution a realistic portfolio selection model with typical market frictions taken into account is established based on the new measure real data from the chinese stock markets and american stock markets are used for empirical comparison of the new risk measure with the expected shortfall risk measure the in sample and out of sample empirical results show that the new risk measure and the corresponding portfolio selection model can not only reflect the investor s risk averse attitude and the impact of different trading constraints but can find robust optimal portfolios which are superior to the corresponding optimal portfolios obtained under the expected shortfall risk measure

how much does country matter an analysis of firms growth options recent international strategy research emphasizes the importance of understanding the effects of geographic location on firms strategies and performance outcomes we contribute to this research by providing empirical evidence that the interplay of country and industry effects matters substantially in explaining the variation in the value of growth options of firms based in different countries our results show that country industry effects are the second largest source of variation following firm effects while industry and country effects are relatively small when considered in their own right that valuable growth options are tied to country and industry interactions has important implications for international strategy research and practice

retail chains corporate social responsibility communication this study examines determinants of retail chains corporate social responsibility csr communication on their web pages the theoretical foundation for the study is signaling theory which suggests that firms will communicate about their csr efforts when this is profitable for them and when such communication makes it possible for outsiders to distinguish good from bad performers based on this theory i develop hypotheses about retail chains csr signaling the hypotheses are tested in a sample of 208 retail chains in the norwegian market as hypothesized i find that foreign chains chains using private brands and vertically integrated chains are more likely to signal but i find no relationship between pricing and signaling in further analysis using chains csr memberships and certifications as the measure of signals only the relationship between organizational form and signaling is replicated in total the findings give partial support to signaling theory

regime switching in the relationship between equity returns and short term interest rates in the uk abstract this paper examines the relationship between uk equity returns and short term interest rates using a two regime markov switching egarch model the results suggest one high return low variance regime within which the conditional variance of equity returns responds persistently but symmetrically to equity return innovations in the other low mean high variance regime equity volatility responds asymmetrically and without persistence to shocks to equity returns there is evidence of a regime dependent relationship between shorter maturity interest rate differentials and equity return volatility furthermore there is evidence that events in the money markets influence the probability of transition across regimes

decision making under uncertainty a field study of cumulative prospect theory abstract the presented research tests cumulative prospect theory cpt kahneman d tversky a 1979 prospect theory an analysis of decision under risk econometrica 47 263 291 tversky a kahneman d 1981 the framing of decisions and the psychology of choice science 211 453 480 in the financial market using us stock option data option prices possess information about actual investors preferences in such a way that an exploitation of conventional option analysis along with theoretical relationships makes it possible to elicit investor preferences the option data in this study serve for estimating the two essential elements of the cpt namely the value function and the probability weighting function the main part of the work focuses on the functions simultaneous estimation under cpt original parametric specification the shape of the estimated functions is found to be in line with theory comparing to results of laboratory experiments the estimated functions are closer to linearity and loss aversion is less pronounced

domestic versus international capital mobility some empirical evidence this paper develops an empirical test to determine whether on average capital moves more easily between industries within a country or between coun tries within an industry the test is applied using cross section dat a on accounting rates of return to capital of u s multinational corp orations in 1966 and 1977 it is found that international capital mob ility was greater in the earlier period but domestic capital mobilit y tended to dominate in the later period these findings are of parti cular importance to the field of international economics since compe ting trade models use opposite assumptions as regards which type of c apital mobility is greater

on the heterogeneity of firms abstract an important issue in corporate strategy is to explain persistent differences in conduct and performance among close competitors within an industry while io economists generally seek technology and market based explanations firm theorists and business policy scholars rather look for historical and organizational reasons the paper first summarizes recent findings along these two approaches it then studies sources of persistent differences between two firms competing a la cournot on two identical markets in this context both types of explanations are found to matter we show that the firms respective capabilities i e the parameters that determine their cost of producing the two goods would diverge only if some difference in the firms respective initial capabilities exists or there is an appropriate combination of organizational inertia the cost for updating current capabilities and market conditions

the two faces of competition dynamic resourcefulness and the hypercompetitive shift competition in the american economy has fundamentally changed over the last few decades from static to dynamic this study labels this important change the hypercompetitive shift and documents it across 200 industries of the us manufacturing sector during i958 to 1991 for industries that undergo a hypercompetitive shift there is an increase in the cross firm variance in performance and a rotation in the value rivalry relationship from a negative association to an inverted u as a consequence of these competitive changes the strategic focus of firms shifts from careful exploitation of given highly durable strategic assets to the steady creation of many new rapidly depreciable ones the key driver of hypercompetitive shift is the dynamic resourcefulness of an industry or the ease with which new strategic assets can be created determinants of dynamic resourcefulness include the dynamism of related transactors notably consumers and suppliers the knowledge base of the industry and structural condi

trade liberalization and delocalization new evidence from firm level panel data the authors examine how u s multinational corporations mncs and their canadian affiliates responded to the substantial bilateral tariff reductions that occurred over the 1983 92 period using confidential firm level data from the bureau of economic analysis they focus on the mncs allocation of employment and capital across canada and the united states the authors find that canadian affiliate employment and assets were negatively correlated with canadian tariff rates a pattern that contradicts the notion that canadian tariff reductions would lead to a hollowing out of canadian manufacturing they also find evidence of substantial heterogeneity in mncs responses to tariff changes even within narrowly defined industries

does corporate strategy matter a revisionist view that corporate strategy does not matter has gained considerable influence in recent years this view largely stems from empirical results of early variance decomposition studies that found negligible corporate effects associated with profitability differences between businesses our analysis of the variance decomposition literature shows this view to be incorrect not only do the studies as a group show that factors at the corporate level of organizations contribute to profitability differences but also evidence suggests that factors specifically associated with corporate strategy contribute to corporate effects corporate strategy in fact does matter copyright 2001 john wiley sons ltd

the intertemporal stability of the concentration margins relationship using a longitudinal data base we find that there has been a substantial narrowing of the spread between the price cost margins of concentrated and unconcentrated industries including measures of macroeconomic fluctuations into standard price cost margin regressions we find significant differences in cyclical behavior across market structure we also explore a possible explanation unionization for differences in cyclical behavior finally we investigate the degree to which our results are affected by the potential simultaneity of concentration advertising and the price cost margin

compositional change aggregation and dynamic factor demand estimates on a panel of manufacturing firms most empirical research on investment and dynamic factor demand has used aggregated data the large number of authors who have cited this as a source of problems strongly suggests possible benefits from analyzing individual firm data this paper presents an analysis of a panel dataset of us manufacturing firms several models based on cost minimization and a three factor cobb douglas technology are developed the differences concern whether the technology varies across two digit sic industries the presence of fixed adjustment lags and the determinants of adjustment costs identification relies on the rational expectations hypothesis and estimation on non linear 3sls the estimates indicate that versions with the adjustment lag perform better than others conditional elasticities reveal that factor demand responds rapidly to anticipated changes in output and factor prices a finding consistent with other recent work it appears that the factor demand of large firms is more price sensitive and less sensitive to output than small firms consistent with recent work on credit market imperfections comparison of the results based on the pooled and the industry varying technologies indicate that the use of aggregate data is indeed a source of problems

internal versus external market conditions and firm profitability an exploratory model a significant portion of the quantitative work in industrial organisation has been directed towards the estimation of market structure performance relationships however despite the immense amount of work which has been undertaken much remains in controversy inter industry research and the conventional interpretation of its findings have been effectively challenged both because of serious measurement problems and because the estimated equations have not been grounded in tight theoretical models it is generally accepted by now that the existing empirical studies have not unambiguously quantified the extent to which efficiency collusion economies of scale entry product differentiation and other structural effects contribute to observed intra and inter industry differences in profitability therefore cross section analysis limited by serious problems of measurement and interpretation has largely fallen out of fashion most of the theoretical models on the other hand have not been formulated to facilitate empirical testing their underlying theory is not cast in terms of readily available measures and they often capture only a part of the relationship between structure and performance 2 this paper takes a step towards bridging the gap between these two literatures it presents an estimable model of oligopoly which identifies the effects of internal market conditions degree of actual competition among the established sellers in the market and external conditions potential competition from outside firms on firm and market performance the model generalises those of spence and dixit stiglitz by allowing non symmetric monopolistic competitors to advertise and by considering potential entry with products that are identical to pre existing ones as well as with new variants the model represents a monopolistically competitive industry with n differentiated niches i am indebted to robert willig for many of the ideas of this paper i am also grateful to paul geroski harry kelejian dennis mueller and two anonymous referees for their helpful comments the conclusions presented herein are those of the author and have not been adopted in whole or in part by the federal trade commission or any entity of the commission the disclosure avoidance officer has certified that the data included in this paper do not identify individual company line of business data i alone can be held responsible for the paper s contents 1 schmalensee i 989 offers an illuminating summary of the problems of measurement and interpretation in cross section analysis cowling 1976 focuses on issues of specification also in an impor ant methodological departure from traditional cross section analysis schmalensee i985 uses a descriptive model of firms profitability that focuses on the existence and importance of firm industry and market share effects instead of the testing of hypotheses about structural parameters 2 for well defined models see among others cowling and waterson 1976 dansby and willig i979 and spence i980

a theory of credibility this paper presents models in which one agent must decide whether to trust another whose motives are uncertain reliability can only be communicated through actions in this context it pays for people to build a reputation based on reliable behaviour someone becomes credible by consistently providing accurate and valuable information or by performing useful services the theory provides a justification for long term arrangements without binding contracts it also describes those situations where it pays an agent to cash in on his reputation many decisions depend on trusting someone consumers must decide whether to believe advertisements banks need to judge the reliability of loan applicants and employers must decide how much responsibility to delegate to their employees this paper attempts to model situations that arise when someone is uncertain about whether to trust the people he deals with in this context reputations for reliability are valuable an agent becomes credible by consistently providing accurate valuable information or by always acting responsibly i analyse a series of simple abstract models of information transmission in the basic model there are two agents the sender s and the receiver r who are to play the game a known finite number of times at each stage both players learn the value of a parameter measuring the importance of that period s play of the game that is the value of making a correct decision and s obtains payoff relevant information s then sends a signal to r who makes a decision that affects the welfare of both players after both players learn the consequences of r s decision the process repeats at each stage r must decide what action to take in order to do that he must assess the credibility of s the difficulty arises because r is uncertain about s s preferences when play begins i model this by assuming that with positive probability s has identical preferences to r s is a friend and with positive probability s has completely opposed preferences to r s is an enemy this uncertainty creates a trade off for enemy senders at each stage providing honest information enhances s s reputation but only at the expense of foregoing an opportunity for immediate gain by duping r the possibility that s is a friend lends credibility to what he says but this credibility may also be exploited by an enemy s the principal equilibrium has the following form in the basic model where s has no control over the importance of a given play s typically conveys accurate information for the first several periods r raises the probability he places on s being friendly after receiving accurate information if he believes that an enemy would have lied to him with positive probability the more important the information the more likely an enemy will attempt to deceive r an enemy will eventually take advantage of r by misleading him when this happens the sender loses all opportunities for deception in the future i

firm and industry effects in industrial economics the traditional view in industrial economics suggests that high concentration leads to tacit collusion poor performance and elevated profit followers of the traditional view relied upon the empirical relationship between profit rates and market concentration to justify the highly activist antitrust policy of the 1945 1980 period the activist antitrust era reached its zenith with the nearly per se prohibition of horizontal mergers as outlined in the 1968 merger guidelines issued by the justice department s antitrust division the 1980s have witnessed the emergence of the revisionist school as the dominant view in the field of industrial economics the revisionists contend

loss averse preferences and portfolio choices an extension abstract in this paper we generalise existing models of loss averse preferences this extension clarifies the impact of stochastic changes in risk on the optimal degree of risk taking our more general model highlights an intuitive link between the literature on loss averse behaviours and the notions of prudence and temperance recently introduced in the literature we also stress the link between our approach and the use of var and cvar as risk measures

power and firm profitability in supply chains french manufacturing industry in 1993 the paper examines the relationships between the power of suppliers and buyers and the profitability of sellers who are situated in supply chains between both sets of firms a review of the literature on power in exchange relations shows there are several power concepts which may have a different impact on seller profitability and whose impact possibly can offset each other this may be the source of the conflicting evidence on this topic a failure to distinguish among the concepts may also lead to an underestimation of industry effects relative to resource effects as drivers of firm profitability the paper uses a new data base of the banque de france on french manufacturing industry the anlayses examine whether different power concepts may be empirically identified and what their relationships are with seller profitability the findings point to the existence of multiple power concepts and indicate that in the sample industry effects are more important than firm effects as measured by relative market share in explaining seller profitability the findings also suggest that buyer power explains a much larger percentage of the variance in seller profitability than supplier power 1998 john wiley sons ltd

is tourism firm competitiveness driven by different internal or external specific factors new empirical evidence from spain abstract the quest to understand the multilevel antecedents of competitiveness has led to a separation of approaches on one side of the question are the environment theories that analyze the structural characteristics of the general and competitive environment on the other side are the resource based view and its extensions that highlight firm specific resources and capabilities as the main basis of firms competitiveness however in recent years the nature of competition and shifting economic conditions have given rise to new theoretical approaches that complement the assumptions underlying both environmental and firm theories specifically this study contributes by examining the regional environment effect the district effect and the strategic group effect through a study of 364 spanish tourism firms this research explores the relative importance of distinct external forces such as the general environment or country effect the regional effect the competitive environment or industry effect the district effect and internal factors such as the firm s tangible resources capabilities and strategy selection the results demonstrate that firms capabilities are more important than environment effects and tangible resources

circumstance and choice the role of initial conditions and policies in transition economies the experience of countries in transition from a planned to a market oriented economy has varied greatly the clearest differences are between the east asian countries china and vietnam and the countries of central and eastern europe cee and the former soviet union fsu china and vietnam have contained inflation and benefited from continued high growth in gdp since the beginning of their reforms while all cee and fsu countries have experienced large declines in output and most have experienced hyperinflation but even in cee and the fsu differences are marked some countries have lost over half of their gdp and growth performance in a number of countries is still poor while others are growing strongly some are still suffering from high inflation while others have successfully reduced annual inflation what determines this divergence of outcomes across transition countries no study so far has analyzed the interaction of all factors including initial conditions political change and reforms in a unified framework including cee the fsu china and vietnam the authors examine these broader interactions but focus first on the role of initial conditions such as initial macroeconomic distortions and differences in economic structure and institutions which have been emphasized less in the literature they find that initial conditions and economic policy jointly determine the large differences in economic performance among the 28 transition economies in the sample initial conditions dominate in explaining inflation but economic liberalization is the most important factor determining differences in growth but reform policy choices are not exogenous they depend in turn on both initial conditions and political reform with political reform the most important determinant of the speed and comprehensiveness of economic liberalization other findings provide additional insight into these relationships results show that liberalization has a negative contemporaneous impact but a stronger positive effect on performance over time the results also show that macroeconomic and structural distortions are negatively related to both policy and performance regarding the former unfavorable initial conditions discourage policy reforms but do not diminish their effectiveness once they are implemented the authors find some evidence that the influence of initial conditions diminishes over time this is in part because many of the initial conditions are themselves modified in the course of transition monetary overhangs are dissipated through inflation industrial overhang is eroded as plants shut down and market memory returns through experience

a meta analysis of the international gender wage gap abstract since the early 1970s a number of authors have calculated gender wage differentials between women and men of equal productivity this meta study provides a new quantitative review of this vast amount of empirical literature on gender wage differentials as it concerns not only differences in methodology data and time periods but also different countries we place particular emphasis on a proper consideration of the quality of the underlying study which is done by a weighting with quality indicators the results show that data restrictions i e the limitation of the analysis to new entrants never marrieds or one narrow occupation only have the biggest impact on the resulting gender wage gap moreover we are able to show what effect a misspecification of the underlying wage equation like the frequent use of potential experience has on the calculated gender wage gap over time raw wage differentials worldwide have fallen substantially however most of this decrease is due to better labor market endowments of females

the effects of firm size and industry on corporate giving recent downward trends in corporate giving have renewed interest in the factors that shape corporate philanthropy this paper examines the relationships between charitable contributions firm size and industry improvements over previous studies include an irs data base that covers a much broader range of firm sizes and industries as compared to previous studies and estimation using an instrumental variable technique that explicitly addresses potential simultaneity between charitable contributions and profitability important findings provide evidence of a cubic relationship between charitable giving and firm size and evidence of strong industry effects the plus minus plus regression coefficient sign pattern for the cubic firm size model suggests that small and large firms give more relative to total receipts with lower giving ratios among medium size firms one interpretation for this finding is that small firms are close to the communities they serve while high visibility creates a need for large firm philanthropy strong industry effects provide evidence of inter industry differences in giving culture and or different public relations requirements across industries

markets vs management what drives profitability this study addresses the issue of the relative degree of variance in roa accounted for by industry corporate and sbu effects while controlling for the business cycle and the interaction between the business cycle and industry two key articles schmalensee 1985 and rumelt 1991 are discussed in detail research results on a recent data base compustat using variance components analysis varcomp are presented that not only confirm most of the rumelt 1991 findings but also suggest the existence of a corporate effect heretofore undetected

market structure marketing method and price instability data for metals sold on commodity exchanges and at prices set by producers are used to test the relationship between the organization of markets and the behavior of prices on the production side the question is whether prices are more stable in concentrated industries and on the sales side the question is whether markets where buyers are consumers have more stable prices than those with consumers and speculators the recent increase in metal price instability is explained by changes in the market structure and organization variables foremost is increased reliance on commodity exchanges declines in concentration are of less importance

u s canada trade liberalization and mnc production location using confidential firm level panel data from the bureau of economic analysis we examine how the bilateral trade flows of u s multinational corporations mncs and their canadian affiliates responded to u s canadian tariff reductions from 1983 to 1992 we find that canadian affiliate sales to the united states are negatively correlated with canadian tariffs but u s parent sales to canadian affiliates have little association with canadian tariffs these results contradict the notion that canadian tariff reductions would lead to a hollowing out of canadian manufacturing we also find substantial heterogeneity in mnc responses to tariff changes within narrowly defined manufacturing industries overall bilateral trade liberalization is trade creating as u s mncs integrated their north american production such that canadian affiliates increased sales to the united states and reduced domestic sales

successful in the long run a meta regression analysis of persistent firm profits we study the profit persistence literature by applying meta regression analysis mra to a set of 36 empirical papers which analyze the persistence of abnormal firm profits over time the analyzed literature provides evidence for a mediocre degree of persistence in abnormal profits an initial analysis of the distribution of reported profit persistence estimates reveals some degree of excess variation this points toward publication bias that favors significant results independent of their algebraic sign the mra however reveals that publication bias is particularly favoring results that indicate profit persistence and thus contradict the neoclassical model of perfect competition moreover the mra enables to control for heterogeneity driven by the study design we find that the analyzed country developing vs developed the applied econometric approach as well as the analyzed period of time are significant drivers of heterogeneity in reported persistence estimates

retail philanthropy firm size industry and business cycle this article investigates the effects of firm size profitability industry affiliation and the business cycle on retailer philanthropy the importance of industry and firm effects on giving was analyzed with regression models using industry fixed effects as well as firm strategy variables the analysis included instrumental variables methodology to account for simultaneity in the charitable giving profits relationship data were gathered from the irs corporate statistics of income sourcebook data that provide firm size class measures covering the entire firm size distribution ranging from small retailers up to large multi national retail firms retailer philanthropy was measured as the ratio of charitable contributions to total receipts important findings include a cubic relationship between retailer philanthropy and firm size industry effects stronger than those observed for retail profit and the absence of business cycle effects the empirical research relating retail charitable giving to firm attributes including firm size and advertising industry and business cycle factors are unique in the business ethics literature prior studies regarding the importance of industry on charitable giving utilized data across broad sectors of the economy firms from different sectors could be expected to differ in philanthropic approach due to differences in public contact as well as differences in public relations exposure the strong industry effects reported for this sample of exclusively retail firms with similar public contact provide strong evidence for the importance of industry in determining firms charitable strategies

the convergence of profits in the long run inter firm and inter industry comparisons this paper considers the extent to which the short run dynamic behavior and long run equilibrium levels of profitability differ among firms within the same industry movements in profits are modeled in terms of firm specific deviations from average industry profits and industry specific deviations from economy wide average returns applied to a sample of 217 large u k firms 1951 77 the results suggest that considerable heterogeneities exist within most industries that is most firms profitability experience differs considerably from those of their closest rivals copyright 1987 by blackwell publishing ltd

tobin s q and the structure performance relationship comment the exchange of comments between william shepherd and michael smirlock thomas gilligan and william marshall this review december 1986 raised two key points that remain unresolved the first point is whether tobin s q ratio a firm s financial market value divided by replacement cost of its assets is a better measure of firm performance than accounting rates of return the second point of contention is whether superior performance however measured can be attributed to efficiency rather than market power this paper offers further clarification on both of these points in section i the performance measure choice is shown to be influenced by fundamental differences between finance and economics in section ii the structure performance model employed by smirlock gilligan and marshall hereafter sgm and shepherd is shown to be a special case of a more general model allowing for a dependence of the market share performance relationship on the concentration ratio the same data from the original study by sgm 1984 are used in section iii to provide a comparison of sgm s findings with empirical results from an alternative specification of the structure performance model this comparison suggests that attributing superior firm performance exclusively to efficiency is not well founded concluding remarks are found in section iv

how loss averse are investors in financial markets abstract we investigate loss aversion in financial markets using a typical asset allocation problem our theoretical and empirical results show that investors in financial markets are more loss averse than assumed in the literature moreover loss aversion changes depending on market conditions investors become far more loss averse during bull markets than during bear markets indicating their more profound disutility for losses when others enjoy gains contrary to most previous results we find that investors are more sensitive to changes in losses than changes in gains

will affirmative action policies eliminate negative stereotypes a key question concerning affirmative action is whether the labor market gains it brings to minorities can continue without it becoming a permanent fixture in the labor market the authors argue that this depends on how the policy affects employers beliefs about the productivity of minority workers they study the joint determination of employer beliefs and worker productivity in a model of statistical discrimination in job assignments the authors prove that even when identifiable groups are equally endowed ex ante affirmative action can bring about a situation in which employers correctly perceive the groups to be unequally productive ex post copyright 1993 by american economic association

tobin s q and the importance of focus in firm performance using tobin s q as a measure of performance we seek to estimate the relative importance of industry focus and share effects in determining firm performance our methods are analogous to those of richard schmalensee and like him we find that industry effects account for the majority of the explained variance however we also find that firm effects exist in the form of focus effects that is narrowly diversified firms do better than widely diversified firms we interpret this finding as consistent with profit maximization by firms with different factor endowments

in pursuit of monopoly power recent quantitative work in industrial economics this paper reviews empirical work in industrial organization devoted to the question of inferring the existence of monopoly power from data on observed market outcomes like profits and prices the discussion covers inter industry work long conventional in the area newer developments in intra industry analysis and case studies and concludes with some remarks on a small but growing body of work assessing market dynamics the wide range of studies reviewed all generally reveal that market power exists in many industries

new frontiers in international strategy this paper studies a new frontier in the understanding of international strategy is to explore it we propose the analogy of the ecology of firms and places as a way to emphasize that the real problem is the colocation of different places with different types of firms locations are in fact the distinctive content of international business strategy we deal with this problem with four different perspectives first differences across countries must be addressed with integrative frameworks able to represent the multidimensionality of semiglobalization or intermediate states between total localization and total integration second differences in the development of intermediary markets in a particular place influence firm positioning and industry structure in that place but their impact also crosses different places and it is endogenous to the ecology of places and firms in a systemic integrative way that makes simplifications extremely risky in the design of competitive strategy in an international context third places firms and strategies form a complex ecology that can be studied with a framework focused in understanding the geography strategy link that incorporates different levels of analysis new economic actors and a set of primitives finally firms around the ecology of places face the challenge of developing strategies and business models to serve the majority of humanity today excluded from world trade it is a fundamentally different way to think about the ecology of places and firms overall we present an intriguing new frontier with the capacity to impact both research and practice in the field of international strategy based in understanding the interplay among firms and places

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

grade inflation social background and labour market matching a model is presented where workers of differing abilities and from different social backgrounds are assigned to jobs based on grades received at school it is examined how this matching is affected if good grades are granted to some low ability students such grade inflation is shown to reduce the aggregate wage of the lower class workers because employers use social origin as a signal for productivity if grades are less than fully informative moreover the high ability students from the higher class may benefit from grade inflation since this shields them from the competition on the part of able students from the lower classes

the voyage of the beagle into innovation explorations on heterogeneity selection and sectors the aim of the paper is to assess heterogeneity of the innovation process using exploratory factor analysis on micro data from the third community innovation survey in 13 countries we identify four patterns that can be interpreted as research user external and production ingredients of innovation all too often it is assumed that how firm innovate can be represented by differences across sectors and or countries to put this proposition under scrutiny we partition variability of the factors scores into components identified by these higher levels sectors and countries matter to a certain extent but far more of the variance is given by heterogeneity among firms within both of them however groups of firms produced by cluster analysis account for much higher share of the variance which indicates that the most relevant stratification of the data cuts across the established sectoral and national boundaries we discuss implications of these findings for understanding of selection in evolutionary economics and for the literature on innovation systems

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

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

management and ownership effects evidence from five countries despite the growing recognition in the corporate governance literature that the relationship between ownership concentration and profitability is context dependent this issue has not yet been subjected to direct empirical investigation using a single cross national sample this study empirically examines the ownership concentration performance relationship across the nations of canada france germany the united kingdom and the united states essentially we argue that the correlation if any between ownership concentration and firm profitability differs across countries in a systematic way determined by the national system of corporate governance results indicate that important and statistically significant differences do in fact exist across the countries studied 1998 john wiley sons ltd

the persistence of shocks to profitability in this study we use data for 1981 through 1994 on a large sample of u s companies to examine the persistence of incremental industry corporate parent and business specific effects on profitability our results indicate that the incremental effects of industry on profitability persist longer than the incremental effects of the corporate parent and of the specific business changes in industry structure have a more persistent impact on profitability than do changes in firm structure

market liberalization and firm performance during china s economic transition this paper examines the impact of market liberalization on firm performance through institutional changes during the economic reform in china the conceptualization focuses on the decentralization of control ownership restructuring and industrial policy as the primary institutional changes to implement market liberalization in china these institutional changes affect firm performance by shaping managerial incentives affecting transaction and agency costs and making selective resource allocations across and within industries using a large scale data set including 23 577 firms between 1992 and 1996 the study examines how market liberalization affects the profitability and productivity of chinese firms and the relationship between ownership change and the performance of state owned enterprises

an asset allocation puzzle this paper examines popular advice on portfolio allocation among cash bonds and stocks it documents that this advice is inconsistent with the mutual fund separation theorem which states that all investors should hold the same composition of risky assets in contrast to the theorem popular advisors recommend that aggressive investors hold a lower ratio of bonds to stocks than conservative investors the paper explores various possible explanations of this puzzle and finds them unsatisfactory copyright 1997 by american economic association

from boom til bust how loss aversion affects asset prices this article studies the impact of heterogeneous loss averse investors on asset prices in very good states loss averse investors become gradually less risk averse as wealth rises above their reference point pushing up equity prices when wealth drops below the reference point the investors become risk seeking and demand for stocks increases drastically eventually leading to a forced sell off and stock market bust in bad states heterogeneity in reference points and initial wealth of the loss averse investors does not change the salient features of the equilibrium price process such as a relatively high equity premium high volatility and counter cyclical changes in the equity premium

economic fluctuations market power and returns to scale evidence from firm level data recent research on aggregate fluctuations coupled with ongoing work in industrial organization has renewed interest in the existence magnitude and cyclical pattern of market power and the extent of increasing returns to scale by exploiting restrictions from dynamic theory and information from financial markets we present a framework for generating quantitative evidence on market power and returns to scale tailoring the econometric model to firm level panel data we calculate the percentage differential between price and marginal cost the lerner index in terms of the parameters from the econometric system results for firms in eleven industries indicate that there is a great deal of heterogeneity in the extent of market power industries with significantly positive lerner indices tend to have substantial increasing returns in the production technology we find that there is only a modest relation between our estimated lerner indices and traditional measures of market power and that when market power varies temporally it is usually procyclical thus variations in the markup of price over marginal cost may help dampen aggregate economic fluctuations

a closer look at the effect of market growth on industries profits everybody talks about the relation of industries profit rates to their markets rates of growth but nobody does anything about it specifically researchers have confirmed the effect of the growth of nominal output on profits in many multivariate studies without specifying closely the hypothesis under test or the measure of demand growth appropriate to test it a profits growth relationship could stem from several mechanisms the lagged adaptation of capacity to unexpected changes in demand reactions of oligopolists to disturbances in their consensus etc these mechanisms how and where they work hold their own normative interest therefore knowing what behavior and what structure lying behind it accounts for the profits growth relationship should do more than improve the specifications of our studies of allocative efficiency it should also expand our knowledge of adaptive processes that are important and hard to observe directly in this paper we shall synthesize the available explanations of why changes in market demand should affect an industry s profits then present a statistical test of the relative significance of the competing explanations

can small firms find and defend strategic niches a test of the porter hypothesis a number of studies have found a positive relation between market share and profitability michael porter argues that this need not hold when small firms find strategic niches protected by mobility barriers this paper examines that hypothesis by comparing the profitability of large and small lines of business when the activities of the two groups proxied by the allocation of sales across submarkets differ on average the authors find that in heterogeneous product mix industries profits of large lines of business are no longer significantly greater than profits of smaller rivals except that market leaders maintain their advantage regardless of product mix copyright 1989 by mit press

corporate and industry effects on business unit competitive position we partition the variances of market shares which we use as surrogates for competitive position of the business units of all public manufacturing companies available in the trinet data base into industry factors corporate parent specific factors and business unit specific factors our results differ somewhat from rumelt s 1991 which decomposed variances in profitability we find that corporate parent effects on market share are considerably greater than zero when lines of business are defined more narrowly when small business units are included and when firms are medium sized our results suggest that the relative importance of corporate industry and business unit effects depends on the types of criteria such as the level of industry aggregation whether small business units are included and firm size that are used to construct samples copyright 2000 john wiley sons ltd

risk and return on long lived tangible assets abstract assuming rational expectations a specialization of ross arbitrage pricing theory is used to obtain a simple securities market valuation formula when dividends follow linear stochastic processes the implications of this model for the use of accounting data to measure risk and for capital budgeting are explored a new measure of riskiness based on accounting data is derived and the use of risk adjusted discount rates is evaluated

technical efficiency market share and profitability of manufacturing firms in cote d ivoire the technology trap this paper investigates the sources of inefficiency of firms in cote d ivoire and exam ines to what extent these effects translate into poor performance a large majority of firms is technically inefficient producing far below the maximum attainable output level major cost savings can also be realised through enlarging the scale of activities of firms efficiency gains and scale advantages translate into a better competitive position and via their impact on market share into higher profitability however severe growth barriers and imperfect markets keep firms from realising these gains and prevent firms from catching up in technology with respect to their larger older and often foreign owned competitors

do industry level analyses improve forecasts of financial performance prior research documents mean reversion in firm profitability and growth under the implicit assumption that profitability and growth of all firms revert to a common benchmark at the same rate however a large body of academic research suggests that there are systematic interindustry differences e g industry barriers to entry that differentially affect firm performance based on industry membership we evaluate the relative forecast accuracy of mean reverting models at the industry and economywide levels and find that industry specific models are generally more accurate in predicting firm growth but not profitability

is there a causal effect of concentration on persistent profitability differentials this article searches for a causal effect of industry concentration on estimates of persistent profitability differentials i offer solutions to identification problems that plague related analyses by applying an iv and a natural experiment this is the first study that explains estimates of persistent profit differentials using business segments data allowing to match micro and industry level data more consistently testing linear relations critical concentration levels and interactions with mobility barriers i find no evidence that concentration has any positive effect on long run profitability differences results rather tend to point to a statistically and economically significant negative causal effect

a capability based view of competitive heterogeneity the question of how firms differ is paramount to strategy scholars this question has motivated empirical research on the factors influencing performance differences among close competitors it also has motivated work on factors that increase or decrease the mean performance of firms in an industry theories about resources and capabilities tend to dominate discussions of heterogeneity in performance and superior performance yet the strategy field lacks a cumulative body of empirical work showing how firms differ this article derives conclusions and questions from empirical work on capabilities we then discuss work that complements but lies beyond the boundaries of traditional capabilities research we conclude by suggesting approaches to and areas of future work

how much does industry matter an alternative empirical test empirical studies using federal trade commission line of business data have reported that industry membership explains between 17 percent and 20 percent of financial performance variance among firms this study attempts to replicate these findings using an alternative sample and a methodology based on executives perceptions the results support those reported in previous studies with industry factors explaining about 20 percent of overall performance variance moreover the analysis produces empirically derived industry factors and examines their relative power in explaining industry performance variance

portfolio insurance and prospect theory investors popularity and optimal design of capital protected financial products abstract portfolio insurance strategies are used on both the institutional and the retail side of the asset management industry while standard utility theory struggles to provide an explanation this study justifies the popularity of portfolio insurance strategies in a behavioral finance context we run monte carlo simulations as well as historical simulations for popular portfolio insurance strategies and benchmark strategies in order to evaluate the outcomes using cumulative prospect theory our simulation results indicate that most portfolio insurance strategies are the preferred investment strategy for a prospect theory investor moreover the analysis provides insights into how portfolio insurance products should be designed and structured to meet the preferences of prospect theory investors as accurately as possible

organization markets and persistence of profits in italian industry abstract persistence of profits is found in a large sample of italian manufacturing firms inter cluster differences are remarkable in two respects i product markets where the degree of price differentiation is high and suggests that each cluster may correspond to a separate market segment ii internal organization where high profit firms appear to have moved towards less vertically integrated production structures while persistently low profit firms appear to have more integrated organizational forms

charitable motives and bidding in charity auctions research on bidding in auctions has generally relied on the assumption of self interested bidders this work relaxes that assumption in the context of charity auctions because understanding charitable motives has important implications for auction design and charities fundraising strategies this study investigates bidders specific types of charitable motives and the strength of these motives we carry out three controlled field experiments consisting of real life auctions conducted on a local internet auction site we use a novel design in which we simultaneously run charity and noncharity auctions for identical products and vary the percentage donated to charity results show that auctions with proceeds donated to charity lead to significantly higher selling prices a result due to a higher bidding by bidders with charitable motives rather than to increased bidder entry we also find that increased prices only occur when the charitable donation is a percentage of the auction revenue and that a fixed charitable donation associated with each auction has no effect on prices furthermore we find that prices are increasing in the percentage donated to charity we find considerable support for a model of voluntary shill like bidding where charitable bidders try to increase proceeds in charity auctions we also find that auctions with 25 of revenue donated to charity had higher net revenue than noncharity auctions hence companies may be able to use charity auctions as part of a corporate social responsibility strategy and at the same time increase profitability even though they donate part of the proceeds to charity

predicting accounting misconduct the role of firm level investor optimism motivated by a large literature on how firm specific resources such as leadership and management skills strategies organizational capabilities and intellectual properties drive firm performance we propose and find that heterogeneity in investor optimism regarding firm specific attributes plays a very important role in influencing the managerial propensity to manipulate financial statements when firm level investor optimism is moderate the incidence of accounting misconduct increases but it decreases when investors are highly optimistic further market reaction to the announcement of financial restatements is more negative when investors held more optimistic firm specific beliefs at the time of initial misstatement these findings are robust to alternative firm specific optimism measures linked to analysts general investors and unsophisticated individual investors controls for market wide consumer sentiment unexplained by macroeconomic factors economy wide and industry level optimism potential selection bias and reverse causality our analysis highlights the importance of firm level investor optimism in predicting preventing and detecting accounting misconduct

an index of loss aversion to a considerable extent risk aversion as it is commonly observed is caused by loss aversion several indexes of loss aversion have been proposed in the literature the one proposed in this paper leads to a clear decomposition of risk attitude into three distinct components basic utility probability weighting and loss aversion the index is independent of the unit of payment the main theorem shows how the indexes of different decision makers can be compared through observed choices

sustained competitive advantage temporal dynamics and the incidence and persistence of superior economic performance competitive advantage is a key concept in strategic management research for a number of reasons not the least of which is that an avowed consequence of its attainment is held to be superior economic performance however few prior empirical studies have directly and systematically documented the incidence or prevalence of persistent superior economic performance the research reported here is based on empirical studies of a large number of industry samples for which longitudinal data were stratified by levels of performance using a new methodology and then analyzed in terms of their dynamics this new stratification technique was used in lieu of autoregressive methods employed in prior studies of performance persistence to allow for a true outlier analysis because persistent superior economic performance both has been argued theoretically and found empirically to be rare detailed results from a sample of 6 772 firms in 40 industries over 25 years are presented to illustrate the findings that 1 while some firms do exhibit superior economic performance 2 only a very small minority do so and 3 the phenomenon very rarely persists for long time frames these results while not providing direct support for a particular extant strategic management or economic theory concerning firm performance are most consonant with the resource based view of the firm and have implications for significant aspects of other received strategic management and economic theories

do markets differ much this essay reports the results of a crosssection study of differences in accounting profitability that sheds light on some basic controversies in industrial economics most previous cross section studies in this field have been concerned with testing hypotheses about structural coefficients in models meant to apply to essentially all markets as we have learned more about the difficulties of constructing such general models and of performing tests on their structural parameters properly structural cross section analysis has fallen out of fashion in contrast to most of the cross section literature the analysis reported here is fundamentally descriptive it does not attempt directly to estimate or to test hypotheses about structural parameters i hope to show by example that one can perform illuminating analysis of cross section data without a host of controversial maintained hypotheses cross section data can yield interesting stylized facts to guide both general theorizing and empirical analysis of specific industries even if they cannot easily support full blown structural estimation one can view the sort of search for stylized facts conducted here as either a replacement for or an input to interindustry structural estimation depending on one s feeling about the long run potential of that research approach this study also departs from much of the cross section literature by being fundamentally concerned with the importance of various effects not just with coefficient signs and t statistics in particular this essay provides estimates of the relative importance of firm market and market share differences in the determination of business unit divisional profitability in u s manufacturing using 1975 data from the line of business program of the u s federal trade commission ftc i find support neither for the existence of firm effects nor for the importance of market share effects moreover while industry effects apparently exist and are important they appear to be negatively correlated with seller concentration in these data section i relates firm market and share effects to current issues and controversies in industrial economics and thus supplies the motivation for our empirical analysis the remainder of the essay treats the data and

collusion versus differential efficiency testing alternative hypotheses the predictions of collusion and efficiency based static equilibrium explanations of interindustry profitability differences are formally developed and tested using appropriate econometric techniques with intraindustry data on seventy u s internal revenue service minor manufacturing industries in 1963 and 1972 none of the explanations has much explanatory power the 1963 data are consistent with collusion based models while the 1972 data are inconsistent with all non null hypotheses considered patterns of profitability are sharply different in the two years in complex ways apparently unrelated to cyclical forces or the phase ii price controls implications of these results are discussed copyright 1987 by blackwell publishing ltd

optimal asset allocation under linear loss aversion abstract we study the asset allocation of a linear loss averse la investor and compare it to the more traditional mean variance mv and conditional value at risk cvar investors first we derive conditions under which the la problem is equivalent to the mv and cvar problems and solve analytically the two asset problem of the la investor for a risk free and a risky asset then we run simulation experiments to study properties of the optimal la and mv portfolios under more realistic assumptions we find that under asymmetric dependence la portfolios outperform mv portfolios provided investors are sufficiently loss averse and dependence is large finally using 13 eu and us assets we implement the trading strategy of a linear la investor who reallocates his her portfolio on a monthly basis we find that la portfolios clearly outperform mv and cvar portfolios and that incorporating a dynamic update of the la parameters significantly improves the performance of la portfolios

cheap talk in the classroom how biased grading at school explains gender differences in achievements career choices and wages in this paper i provide a theoretical explanation for the gender differences in education and on the labour market that are observed empirically in most oecd organisation for economic cooperation and development countries including the us within a cheap talk model of grading i show that biased grading in schools results in 1 boys outperforming girls in maths and sciences 2 boys having more top and more bottom achievers in maths and sciences than girls 3 girls outperforming boys in reading literacy 4 female graduates enrolling in university studies more often than male graduates 5 the predominance of female students in arts and humanities at the university 6 the predominance of male students in maths and sciences at the university and 7 the gender wage gap on the labour market for the highly educated copyright 2009 wiley blackwell

do unions capture monopoly profits this paper challenges the conclusion reached in recent studies that unions reduce profits exclusively in highly concentrated industries from their review of previous studies and their analysis of 1977 data on 367 fortune 500 firms the authors conclude that there is no convincing evidence that concentration produces monopoly profits for unions to capture moreover they find that the union wage effect is not greater in concentrated industries as suggested by the hypothesis that unions capture concentration related profits evidence is found suggesting that a firm s market share its expenditures on research and development and its protection from foreign competition provide more likely sources for union rents than does industry concentration several recent studies have found that unions reduce profits significantly and some have concluded that this profit reduction is restricted to highly concentrated industries both conclusions are important the finding that unions reduce profitability indicates that in general the cost increasing effects of unions outweigh any positive productivity effects they may bring to the workplace such a

self confidence and personal motivation the maintenance and enhancement of self esteem has always been identified as a fundamental human impulse philosophers writers educators and of course psychologists have all emphasized the crucial role played by self image in motivation affect and social interactions the aim of this chapter is to bring these concerns into the realm of economic analysis and show that this has important implications for how agents process information and make decisions conversely the tools of economic modelling can help shed light on a number of apparently irrational behaviours documented by psychologists

using privileged information to manipulate markets insiders gurus and credibility access to private information is shown to generate both the incentives and the ability to manipulate asset markets through strategically distorted announcements the fact that privileged information is noisy interferes with the public s attempts to learn whether such announcements are honest it allows opportunistic individuals to manipulate prices repeatedly without ever being fully found out this leads us to extend sobel s 1985 model of strategic communication to the case of noisy private signals our results show that when truthfulness is not easily verifiable restrictions on trading by insiders may be needed to preserve the integrity of information embodied in prices

beyond firm and industry effects on profitability in imperfect markets the federal trade commission s line of business data imply that the effect of an industry s seller concentration on profitability has been misinterpreted because it has not been conditioned on capital intensity conclusions that market share rather than seller concentration is the primary structural determinant of profitability and that mutual dependence recognized among oligopolistic sellers is less important than superiority effects of large share firms appear unwarranted significant firm effects exist and explanatory power for a conventional model of structure and performance is found to be small relative to that of the general linear model within which the conventional model is nested

loss aversion under prospect theory a parameter free measurement agrowing body of qualitative evidence shows that loss aversion a phenomenon formalized in prospect theory can explain a variety of field and experimental data quantifications of loss aversion are however hindered by the absence of a general preference based method to elicit the utility for gains and losses simultaneously this paper proposes such a method and uses it to measure loss aversion in an experimental study without making any parametric assumptions thus it is the first to obtain a parameter free elicitation of prospect theory s utility function on the whole domain our method also provides an efficient way to elicit utility midpoints which are important in axiomatizations of utility several definitions of loss aversion have been put forward in the literature according to most definitions we find strong evidence of loss aversion at both the aggregate and the individual level the degree of loss aversion varies with the definition used which underlines the need for a commonly accepted definition of loss aversion

the corporate social performance financial performance link strategic managers are consistently faced with the decision of how to allocate scarce corporate resources in an environment that is placing more and more pressures on them recent scholarship in strategic management suggests that many of these pressures come directly from sources associated with social issues in management rather than traditional arenas of strategic management using a greatly improved source of data on corporate social performance this paper reports the results of a rigorous study of the empirical linkages between financial and social performance corporate social performance csp is found to be positively associated with prior financial performance supporting the theory that slack resource availability and csp are positively related csp is also found to be positively associated with future financial performance supporting the theory that good management and csp are positively related 1997 by john wiley sons ltd