scholarly journals Firm-Level Political Risk: Measurement and Effects*

2019 ◽  
Vol 134 (4) ◽  
pp. 2135-2202 ◽  
Author(s):  
Tarek A Hassan ◽  
Stephan Hollander ◽  
Laurence van Lent ◽  
Ahmed Tahoun
Keyword(s):  
Computational Linguistics ◽  
Fixed Effects ◽  
Political Risk ◽  
Stock Market Volatility ◽  
Conference Calls ◽  
Firm Level ◽  
Quarterly Earnings ◽  
Political Risks ◽  
The Mean ◽  
Over Time

AbstractWe adapt simple tools from computational linguistics to construct a new measure of political risk faced by individual U.S. firms: the share of their quarterly earnings conference calls that they devote to political risks. We validate our measure by showing that it correctly identifies calls containing extensive conversations on risks that are political in nature, that it varies intuitively over time and across sectors, and that it correlates with the firm’s actions and stock market volatility in a manner that is highly indicative of political risk. Firms exposed to political risk retrench hiring and investment and actively lobby and donate to politicians. These results continue to hold after controlling for news about the mean (as opposed to the variance) of political shocks. Interestingly, the vast majority of the variation in our measure is at the firm level rather than at the aggregate or sector level, in the sense that it is captured neither by the interaction of sector and time fixed effects nor by heterogeneous exposure of individual firms to aggregate political risk. The dispersion of this firm-level political risk increases significantly at times with high aggregate political risk. Decomposing our measure of political risk by topic, we find that firms that devote more time to discussing risks associated with a given political topic tend to increase lobbying on that topic, but not on other topics, in the following quarter.

scholarly journals The Global Impact of Brexit Uncertainty

2019 ◽  
pp. 1-60 ◽  
Author(s):  
Tarek A. Hassan ◽  
Laurence van Lent ◽  
Stephan Hollander ◽  
Ahmed Tahoun
Keyword(s):  
Computational Linguistics ◽  
Intention To Leave ◽  
The United States ◽  
Conference Calls ◽  
Firm Level ◽  
International Firms ◽  
Listed Firms ◽  
Quarterly Earnings ◽  
First Moment ◽  
The Impact

Using tools from computational linguistics, we construct new measures of the impact of Brexit on listed firms in the United States and around the world: the share of discussions in quarterly earnings conference calls on costs, benefits, and risks associated with the UK’s intention to leave the EU. Using this approach, we identify which firms expect to gain or lose from Brexit and which are most affected by Brexit uncertainty. We then estimate the effects of these different kinds of Brexit exposure on firm-level outcomes. We find that concerns about Brexit-related uncertainty extend far beyond British or even European firms. US and international firms most exposed to Brexit uncertainty have lost a substantial fraction of their market value and have reduced hiring and investment. In addition to Brexit uncertainty (the second moment), we find that international firms overwhelmingly expect negative direct effects of Brexit (the first moment), should it come to pass. Most prominently, firms expect difficulties resulting from regulatory divergence, reduced labor mobility, trade access, and the costs of adjusting their operations post-Brexit. Consistent with the predictions of canonical theory, this negative sentiment is recognized and priced in stock markets but has not yet had significant effects on firm actions.

Does firm‐level political risk influence corporate social responsibility (CSR)? Evidence from earnings conference calls

2021 ◽  
Author(s):  
Pattanaporn Chatjuthamard ◽  
Sirimon Treepongkaruna ◽  
Pornsit Jiraporn ◽  
Napatsorn Jiraporn
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Political Risk ◽  
Conference Calls ◽  
Firm Level ◽  
Corporate Social

Long-term focus and attitude toward entrepreneurial behaviors: the moderating effect of industry-clockspeed

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nischal Thapa ◽  
Puspa Shah
Keyword(s):  
Fixed Effects ◽  
Moderating Effect ◽  
Least Squares Regression ◽  
Conference Calls ◽  
Firm Level ◽  
Content Type ◽  
Industry Clockspeed ◽  
The Relationship ◽  
The Empirical Analysis

Purpose This study aims to identify and examine the antecedents of attitude toward entrepreneurial behaviors (ATEB) of firms. Additionally, this study also identifies and examines the antecedents of innovativeness and proactiveness. Furthermore, this study explains how factors within and outside the organization affect ATEB, innovativeness and proactiveness. Design/methodology/approach This study uses the attention-based view (ABV) and examines the effects of long-term focus and industry clockspeed on attitude toward firms’ entrepreneurial behaviors (EB). This study measures ATEB by analyzing the top management team’s words in the earnings conference calls. It applies the two-stage least squares regression with fixed effects and instrumental variables to conduct the empirical analysis. Findings The results indicate that the direct effects of long-term focus and industry clockspeed on ATEB are not significant. However, the moderating effect of industry clockspeed on the relationship between long-term focus and EB is significant and positive. The results indicate that firms that are operating in fast clockspeed industries exhibiting long-term focus exhibit EB. Furthermore, the results also indicate that long-term focus and industry clockspeed collectively affect innovativeness and proactiveness. Practical implications This research helps firms to develop entrepreneurial behavior operating under various task environment conditions. Originality/value This study applies the ABV of the firm and contributes to the area of firm-level EB, while prior studies have not implemented this perspective in investigating firm-level EB. Past studies have not applied the ABV of the firm to study EB, innovativeness and proactiveness either independently or collectively.

scholarly journals Country-level Risk and the Tradeoff between Real Earnings Management and Accrual Earnings Management: Evidence from Pakistan

2021 ◽  
Vol 2 (2) ◽  
pp. 1-20
Keyword(s):  
Earnings Management ◽  
Fixed Effects ◽  
Simultaneous Equation ◽  
Least Square ◽  
Real Earnings Management ◽  
Future Research ◽  
Firm Level ◽  
Political Risks ◽  
Country Level ◽  
The Cost

The aim of this study is to understand whether real earnings management (REM) and accruals earnings management (AM) can be used as substitute of one another in the context of Pakistan. Additionally, we also examine the effect of country-level political risk on earnings management. To achieve our desire objectives, we used a panel sample of 197 Pakistani firms for a period of 13 years (2007-2019). To measure REM, we follow Roychowdhury (2006) and to measure AM, we follow Jones (1991) and modified Jones (1995) model. For data analysis, we used simultaneous equation modelling and ordinary least square (OLS) regression with time and firm fixed effects. The results indicate that when the cost associated with REM(AM) increases, the firm’s inclination towards AM(REM) decreases which suggests that managers use both REM and AM approaches as substitutes of one another. Further, the results show that country-level political risks positively affect real REM while it has insignificant effect on AM. Moreover, the adoption of IFRS as accounting standards does not have any effect on the earnings management in Pakistan. This study can be extended to firm-level risk factors to examine their role in earnings management. Moreover, how manager use to adopt REM and AM in the highly regulated industries i.e., financial and services industries, also provides a promising opportunity for future research.

Does firm-level political risk influence corporate social responsibility (CSR)? Evidence from earnings conference calls

2021 ◽  
Author(s):  
Pattanaporn Chatjuthamard ◽  
Sirimon Treepongkaruna ◽  
Pornsit Jiraporn ◽  
Napatsorn (Pom) Jiraporn
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Political Risk ◽  
Conference Calls ◽  
Firm Level ◽  
Corporate Social

The End of Multi-Fibre Arrangement and Firm Performance in the Textile Industry: New Evidence

2013 ◽  
Vol 52 (2) ◽  
pp. 97-126 ◽  
Author(s):  
Zara Liaqat
Keyword(s):  
Textile Industry ◽  
Manufacturing Industry ◽  
Firm Heterogeneity ◽  
Production Functions ◽  
Firm Level ◽  
Quality Ladders ◽  
Sectoral Differences ◽  
The Mean ◽  
New Evidence ◽  
Empirical Methodology

Using a sample of 321 textile and clothing companies for the years 1992 to 2010, this paper analyses the effect of quota phase-outs on firm-level efficiency in Pakistan following the end of the Multi-Fibre Arrangement (MFA). It highlights sectoral heterogeneity within the manufacturing industry as a result of MFA expiration. The empirical methodology uses the structural techniques proposed by Olley and Pakes (1996), and Levinsohn and Petrin (2003) in order to take care of endogeneity in the estimation of production functions. The results differ for the two industries: MFA expiration lead to an increase in the average productivity of textile producing firms but a significant reduction in the mean productivity of clothing producers. We offer a number of explanations for this outcome, such as a change in the input and product mix, entry by non-exporters in the clothing sector, and sectoral differences in quality ladders. A number of crucial policy lessons can be drawn from the findings of this study. JEL Classification:F13; F14; D24; C14; O19 Keywords: Multi-Fibre Arrangement, Trade Liberalisation, Productivity, Firm Heterogeneity, Simultaneity and Production Functions, Endogeneity of Protection

Does Corporate Diversification Retrench the Effects of Firm-Level Political Risk?

2020 ◽  
Author(s):  
M. Kabir Hassan ◽  
Md. Sydul Karim ◽  
Tarun K. Mukherjee
Keyword(s):  
Political Risk ◽  
Corporate Diversification ◽  
Firm Level

Can Twitter Help Predict Firm-Level Earnings and Stock Returns?

2017 ◽  
Vol 93 (3) ◽  
pp. 25-57 ◽  
Author(s):  
Eli Bartov ◽  
Lucile Faurel ◽  
Partha S. Mohanram
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Future Prospects ◽  
Traditional Media ◽  
Stock Trading ◽  
Firm Level ◽  
Quarterly Earnings ◽  
Announcement Returns ◽  
Twitter Activity ◽  
Original Information

ABSTRACT Prior research has examined how companies exploit Twitter in communicating with investors, and whether Twitter activity predicts the stock market as a whole. We test whether opinions of individuals tweeted just prior to a firm's earnings announcement predict its earnings and announcement returns. Using a broad sample from 2009 to 2012, we find that the aggregate opinion from individual tweets successfully predicts a firm's forthcoming quarterly earnings and announcement returns. These results hold for tweets that convey original information, as well as tweets that disseminate existing information, and are stronger for tweets providing information directly related to firm fundamentals and stock trading. Importantly, our results hold even after controlling for concurrent information or opinion from traditional media sources, and are stronger for firms in weaker information environments. Our findings highlight the importance of considering the aggregate opinion from individual tweets when assessing a stock's future prospects and value.

Firm‐level political risk and Shari’ah compliance: equity capital cost and payouts policy

2020 ◽  
Author(s):  
Jamshid Karimov ◽  
Faruk Balli ◽  
Hatice Ozer‐Balli ◽  
Anne Bruin
Keyword(s):  
Political Risk ◽  
Capital Cost ◽  
Equity Capital ◽  
Firm Level
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