Using a sample of loan facilities from 30 countries around the world, we investigate how national cultures affect the relationship between a firm's corporate social responsibility (CSR) performance and its bank borrowing costs. We find that firms with superior CSR performance are more likely to enjoy lower loan interest spreads in countries that exhibit higher levels of egalitarianism and harmony and/or lower levels of hierarchy and mastery. Further analyses reveal that the impact of national culture on the relationship between CSR performance and loan interest spreads is especially significant for borrowing firms with higher customer awareness, heavier R&D intensity, and more opaque information environment. We find national culture of the bank lender itself play an important role in shaping the relation between CSR performance and loan contracting as well. Overall, our findings highlight the important role of national culture in determining the economic consequences of CSR commitments and provide implications for corporate managers who make decisions about CSR strategies.

We investigate how common institutional investors (CIIs) in supply chains affect supplier performance. Social network theory suggests that buyer-supplier relationships are influenced by networks of ties in which they are embedded. While prior research has concentrated on networks of trade interactions, we instead examine the influences of networks through common investors. Utilizing a large sample of buyer-supplier relationships, we find that the presence of CIIs improves suppliers' operating and market performance, especially for suppliers with greater dependence on buyers. In addition, supplier performance increases with the common ownership stakes held by CIIs, but decreases with the asymmetric ownership stakes of CIIs across supply chain partners. We find that better financial collaboration between the partners appears to be a mechanism through which CIIs enhance supplier performance. Lastly, we find that the role of CIIs in strengthening supplier performance is distinct from that of direct equity links. Collectively, our findings highlight a novel role of indirect cross-ownership in fostering supply chain collaboration and coordinating vertical relationships and, in turn, improving supplier performance.

Based on a sample of firms from 20 countries around the world, this study investigates how the relationship between corporate social responsibility (CSR) and bank loan pricing is affected by the degree of national stakeholder orientation. We find that firms with superior CSR performance are more likely to enjoy lower loan costs in more stakeholder-oriented countries than are their counterparts in less stakeholder-oriented countries. This study contributes to the CSR literature by highlighting the importance of national institutional environments in determining the economic consequences of CSR practices.

This study investigates the effect of corporate governance factors on the underpricing of initial public offerings (IPOs) in Hong Kong, and the results show that this effect is significant. IPOs are categorized into four subgroups based on the role of the founder: (1) no-founder firms (companies with no specific founder), (2) pure-founder firms (companies whose founder is neither the company's chairman of the board nor its CEO), (3) founder-chairman/CEO firms (companies whose founder is either the company's chairman of the board or its CEO) and (4) founder-chairman-CEO firms (companies whose founder is the chairman and CEO). The results demonstrate a significant descending pattern for the underpricing level of the four subgroups, which can be explained by the varying incentive and behaviour mechanisms that result from the various founder identities.

What signals do firms in emerging economies send to stakeholders when they adopt corporate social responsibility (CSR) practices? We argue that in emerging economies, firms that adopt CSR practices positively signal investors that their firms have superior capabilities for filling institutional voids. From an institution-based view, we hypothesize that the institutional environment moderates the signaling effect of CSR on a firm's financial performance. Based on a sample of firms from ten Asian emerging economies, we find a positive relationship between CSR practices and financial performance. This positive relationship is stronger in the less developed capital market than in the more developed one. The financial benefits of CSR practices are also more salient in the low information diffusion market than in the high one. We emphasize that signaling theory and the institution-based view can jointly contribute to the CSR literature.

The importance imposed on corporate social responsibility (CSR) is greater in developed economies than in emerging markets. The pressures from various stakeholder groups on the CSR are expected to have substantial spillover impact on companies domiciled in emerging economies that obtain revenues from companies in developed economies. Based on the data from 1,330 listed companies in China, the largest emerging economy in the world, this study provides evidence that the CSR performance of China firms is positively related to the degree of their internationalization, and such a positive association is less pronounced for state-owned enterprises. Our findings support the hypothesis that internationalized companies in emerging economies are motivated to improve their CSR practices to address concerns from their importers or outsourcers in developed economies.

This special issue includes a selection of articles presented at the Fourth World Business Ethics Forum (WBEF) held on December 16–18, 2012, hosted by the School of Business, Hong Kong Baptist University. The School has been placing major emphasis on whole-person business education, with a vision of inspiring business practice, creating values for stakeholders, and enhancing social and economic growth and development. The WBEF was cofounded by the Hong Kong Baptist University (School of Business) and University of Macau (Faculty of Business Administration) in 2006. Held on a biennial basis, it serves as a platform for scholars and the business community to explore new insights in relevant areas of business ethics. The theme of the Fourth WBEF is ‘‘Corporate Social Responsibility and Sustainability.’’ The main objective is to develop research on corporate social responsibility (CSR) and provide implications to corporations for their sustainable development. The forum is a timely event for academics and practitioners as the contemporary business world is facing increasing challenges including economic, environmental, social, and ethical issues. Entrepreneurs are experiencing an evolution of mindset. CSR is not just a strategy of risk management in response to corporate scandals or pressures from stakeholders. It is also a practice with foresight for sustainable success and ultimate benefits. The Forum received a total of 91 papers submitted by authors from different institutions worldwide. 59 papers were selected and presented in 15 concurrent sessions. Over 150 academics and practitioners from 16 countries and regions participated in the Forum. For this Special Issue, we selected 9 best papers to represent the work of the Forum, being clustered in four topics of CSR and sustainability integration, including the conceptualization, its development and normativity, factors influencing CSR, and impacts of CSR. Three papers extended our understanding on the concept of CSR by bringing new thoughts. First, Francois Maon and Adam Lindgreen argue that the cultural aspect of CSR is one dimension being neglected in our understanding. They introduce the notion of corporate cultural responsibility (CCR), which reflects cultural impacts of corporations through value systems. The second and third papers, written by Scott J. Vitell and Catherine Janssen and Joelle Vanhamme, respectively, call for attention on consumer social responsibility (CnSR), which emphasizing the role of the consumer in CSR. Vitell indicates that engagement of the consumer is important for the development of CSR. He examines the proposition and discusses the difference between consumer ethics and consumer social responsibility. Catherine Janssen and Joelle Vanhamme go a step further by their research to look at the relationship between CSR and consumer engagement. Realizing a gap between consumers’ purchase intentions and their actual purchase decisions, Catherine Janssen and Joelle Vanhamme argue that this is a puzzling paradox because CSR has only a minor impact on consumers’ actual purchase decisions. Employing theoretical lenses, the authors propose an integrative framework to understand the CSR-consumer paradox. & Stephen Y. L. Cheung scheung@ied.edu.hk

Hong Kong as a free society, where capitalistic economy is essentially adopted, has failed to balance the distribution of resources and led to the widening of income disparity, indicated by a Gini coefficient of over 0.53 (Ma, 2011) as well as the stagnation of median household income of $18,000 across 10 years (The World Bank, 2012).The problem of poverty and income inequality had been increasingly felt by the citizens (Wong, Wan, & Law, 2010) which severs the stability and legitimacy of the Hong Kong Government's rule which hinges on the materialistic benefit for the whole citizenship (Ma, 2011).The unchangeable fate of poverty as well as the increasing pursuit of social justice (as indicated by an increase of keywords such as "Corporate social responsibility": 6 occurrences in 2001; 522 in 2010) leads to the emergence of scepticism and grievances against the privileged rich (as indicated by an increase of keywords such as "Hate-rich": 0 in 2001; 1257 in 2010).Failure to identify the social confrontation and to exert the Government's role of resource redistribution will lead to governance crisis (Hall, Critcher, Jefferson, Clarke, & Roberts, 1978).Hence, the manager requires indication tools to assess the situation (Holzer & Kloby, 2005).A quantifiable social indicator of media coverage (Bengston & Fan, 1999) is required to evaluate objectively the qualitative social tension.

Using earnings announcement events made by group member firms in Hong Kong, this study examines the governance role of boards of directors in curbing propping activities within family business groups. We find that earnings released by group member firms affect the stock prices of their nonannouncing group peers in a manner consistent with intragroup propping. More importantly, this effect is less pronounced when the announcing firms have a larger board or a board with a higher proportion of independent directors, but more pronounced when they have an executive director from their controlling families acting as board chairperson. Furthermore, the monitoring effect of boards of directors is strengthened for firms subject to new regulations increasing board power. Our results suggest that board oversight can mitigate propping activities.

The proliferation of carry trade - a strategy of simultaneously shorting a low-yielding currency and longing a high-yielding currency raises the concern on its impact on global asset prices. In this exercise, we examine the implications of yen carry trade for stock markets in a few selected target currency countries. Three alternative proxies for carry trade activity - a currency-specific profit measure, a currency-specific futures position variable, and the Deutsche Bank G10 Currency Futures Harvest Index are used. It is found that the three measures of carry trade display various degrees of influences on stock returns in Australia, Canada, Britain, Mexico, and New Zealand. The empirical carry trade effect is robust to the inclusion of three control variables; namely the US stock return, the VIX Index that represents market volatility, and commodity prices. Further, the estimation results suggest that the three measures of carry trade share some common information about stock returns in target currency countries. (C) 2012 Elsevier B.V. All rights reserved.

Recently, the presumed benefits of corporate social responsibility have become an important issue, especially for China where institutional settings are quite different from other parts of the world. Using an internationally accepted benchmark (OECD's Principles of Corporate Governance, OECD, 2004), this study constructs a corporate social responsibility (CSR) index to measure the quality of the corporate social responsibility practices of the 100 major Chinese listed firms during 2004–2007. This enables us to evaluate the progress of the corporate social responsibility practices of Chinese firms. The results show that Chinese companies have been making progress in their corporate social responsibility practices. The findings also show that market rewards Chinese firms for improving their corporate governance practices which implies ‘doing-good’ leads to ‘doing-well’ in the equity market in China. We also find that overseas-listed and more profitable Chinese firms have better improvement in CSR practice. This study has policy implications in pushing for further CSR initiatives in other emerging markets.

We analyze a hand-collected sample of 166 prominent bribery cases, involving 107 publicly listed firms from 20 stock markets that have been reported to have bribed government officials in 52 countries worldwide during 1971-2007. We focus on the initial date of award of the contract for which the bribe was paid (rather than of the revelation of the bribery). Our data enable us to describe in detail the mechanisms through which bribes affect firm value. We find that firm performance, the rank of the politicians bribed, as well as bribe-paying and bribe-taking country characteristics affect the magnitude of the bribes and the benefits that firms derive from them.

The Callable Bull/Bear Contract is a barrier options contract recently introduced to the Hong Kong market. In this study, we propose a trading strategy that defines the entry point and exit point using information on the contract's call price and mandatory call event. Using data on contracts based on the Hong Kong Hang Seng Index, it is shown that the proposed trading strategy, on average, yields some decent trading returns that vary quite substantially across individual trades. Exploratory analyses indicate that trading returns are associated with volatility observed during a contract's lifespan and, to a lesser extent, with volatility in the pre-issuance period. Further, an issuer's relative issuing frequency may bear some implications for the trading strategy's performance.

Recently, the presumed benefits of corporate governance have become one of the most contentious issues especially for emerging markets in Asia where institutional settings are quite different from other parts of the world. Using an internationally accepted benchmark (OECD's Principles of Corporate Governance, OECD, 2004), this study evaluates the progress of corporate governance practice of Chinese listed companies. A corporate governance index (CGI) is constructed to measure the quality of corporate governance practices of the 100 largest listed firms in China during 2004-2006. The results show that Chinese companies have been making progress in the corporate governance reform. The findings also show a positive relation between market valuation and overall corporate governance practices, as measured by the CGI, among these Chinese listed companies. Additional investigation reveals that the rights of shareholders are the main driver in the relationship.

We examine a sample of related party transactions between Chinese publicly listed firms and their controlling shareholders during 2001–2002. Minority shareholders in these firms seem to be subject to expropriation through tunneling but also gain from propping up. On balance, there seems to be more tunneling than propping up. Both types of firms have larger state ownership compared to the rest of the Chinese market but firms that are propped up are larger and have larger state ownership than firms subject to tunneling. Propped up firms are more likely to have foreign shareholders and to be cross-listed abroad compared to firms that are subject to tunneling. Propped up firms also tend to have worse operating performance in the fiscal year preceding the announcement of the related party transaction. Finally, we find that related party transactions representing tunneling are accompanied by significantly less information disclosure compared to related party transactions representing propping.

We analyze related party transactions between Chinese publicly listed firms and their stateowned enterprise (SOEs) shareholders to answer three questions. Do companies always benefit from the presence of government shareholders? Are government shareholders inefficient in maximizing shareholder value? Or do governments extract resources from companies, either to perform a social role or because they are corrupt? We find that related party transactions between firms and their government shareholders seem to result in the expropriation of the minority shareholders of the firm. The expropriation is concentrated in firms with the highest state ownership and controlled by local government SOEs, and in provinces where local government bureaucrats are less likely to be prosecuted for misappropriation of state funds. Overall, our results are most consistent with the grabbing hand model of government.

This study examines the degrees of corporate disclosure and transparency of publicly listed companies in two emerging markets and analyzes corporate disclosure practices as a function of specific firm characteristics. The analysis uses the disclosure and transparency scores extracted from a survey instrument designed to rate disclosure practices of publicly listed companies by using the OECD Corporate Governance Principles as an implicit benchmark. Empirical results show that financial characteristics explain some of the variation in the degrees of corporate disclosure for firms in Hong Kong but not for firms in Thailand. Further, corporate governance characteristics, such as board size and board composition, show more significant associations with the degrees of corporate disclosure in Thailand than in Hong Kong. The results are broadly consistent with the notion that good corporate governance leads to better corporate disclosure and transparency in less developed markets.