The bonding hypothesis revisited: evidence from US class action lawsuits

PurposeConsistent with an “absolute bonding hypothesis,” the benefits of listing on US exchanges experienced by cross-listed firms are accompanied by an increased risk of experiencing a spillover effect due to negative news within their industry. The purpose of this study is to test this form of the bonding hypothesis by analyzing the spillover effect to cross-listed firms when class action lawsuits are filed against their industry peers.Design/methodology/approachThe bonding hypothesis is tested by analyzing the spillover effect to non-sued cross-listed firms of class action lawsuits brought against US domestic firms in the same industry. The spillover effect is identified using cumulative abnormal returns around lawsuit filing dates from 1996 to 2020. A sample of matched non-sued cross-listed and domestic peer firms is evaluated in a cross-sectional analysis to identify country and firm-level characteristics that mitigate the negative spillover effect to cross-listed firms.FindingsWhile US firms realize significantly negative abnormal returns when class action suits are filed against their industry peers, the impact to cross-listed peers is statistically insignificant. In multivariate analyses, we show that the ability of cross-listed firms to avoid this negative spillover effect is stronger for firms with greater profitability that are headquartered in countries with better shareholder protections and governance characteristics.Originality/valueResults suggest that cross-listed firms may have a level of immunization from the negative industry spillover effect of class action lawsuits and, thus, exhibit only “partial bonding” to the US market.

Author’s response: Toward inclusive theories of the evolution of musicality

We compare and contrast the 60 commentaries by 109 authors on the pair of target articles by Mehr et al. and ourselves. The commentators largely reject Mehr et al.’s fundamental definition of music and their attempts to refute 1) our social bonding hypothesis, 2) byproduct hypotheses, and 3) sexual selection hypotheses for the evolution of musicality. Instead, the commentators generally support our more inclusive proposal that social bonding and credible signaling mechanisms complement one another in explaining cooperation within and competition between groups in a coevolutionary framework (albeit with some confusion regarding terminology such as “byproduct” and “exaptation”). We discuss proposed criticisms and extensions, with a focus on moving beyond adaptation/byproduct dichotomies and toward testing of cross-species, cross-cultural, and other empirical predictions.

Clarifying the link between music and social bonding by measuring prosociality in context

To corroborate the music and social bonding hypothesis, we propose that future investigations isolate specific components of social bonding and consider the influence of context. We deconstruct and operationalize social bonding through the lens of social psychology and provide examples of specific measures that can be used to assess how the link between music and sociality varies by context.

Music as social bonding: A cross-cultural perspective

We extend Savage et al.'s music and social bonding hypothesis by examining it in the context of Chinese music. First, top-down functions such as music as political instrument should receive more attention. Second, solo performance can serve as important cues for social identity. Third, a right match between the tones in lyrics and music contributes also to social bonding.

The music and social bonding hypothesis does require multilevel selection

Is musicality an individual level adaptation? The authors of this target article reject the need for group selection within their model, yet their arguments do not fulfill the conceptual requirements for justifying such a rejection. Further analysis can highlight the explanatory value of embracing multilevel selection theory as a foundational element of the music and social bonding (MSB) hypothesis.

Singing is not associated with social complexity across species

Based on their social bonding hypothesis, Savage et al. predict a relation between “musical” behaviors and social complexity across species. However, our qualitative comparative review suggests that, although learned contact calls are positively associated with complex social dynamics across species, songs are not. Yet, in contrast to songs, and arguably consistent with their functions, contact calls are not particularly music-like.

Toward inclusive theories of the evolution of musicality

We compare and contrast the 60 commentaries by 109 authors on the pair of target articles by Mehr et al. and ourselves. The commentators largely reject Mehr et al.'s fundamental definition of music and their attempts to refute (1) our social bonding hypothesis, (2) byproduct hypotheses, and (3) sexual selection hypotheses for the evolution of musicality. Instead, the commentators generally support our more inclusive proposal that social bonding and credible signaling mechanisms complement one another in explaining cooperation within and competition between groups in a coevolutionary framework (albeit with some confusion regarding terminologies such as “byproduct” and “exaptation”). We discuss the proposed criticisms and extensions, with a focus on moving beyond adaptation/byproduct dichotomies and toward testing of cross-species, cross-cultural, and other empirical predictions.

Musical bonds are orthogonal to symbolic language and norms

Both Mehr et al.'s credible signaling hypothesis and Savage et al.'s music and social bonding hypothesis emphasize the role of multilevel social structures in the evolution of music. Although empirical evidence preferentially supports the social bonding hypothesis, rhythmic music may enable bonding in a way uniquely fitted to the normative and language-based character of multilevel human societies.

Regulatory Competition and the Market for Corporate Law

This article develops an empirical model of firms’ choice of corporate laws under inertia. Delaware dominates the incorporation market, though recently Nevada, a state whose laws are highly protective of managers, has acquired a sizable market share. Using a database of firm incorporation decisions from 1995 to 2013, we show that most firms dislike protectionist laws, such as anti-takeover statutes and liability protections for officers, and that Nevada’s rise is due to the preferences of small firms. Consistent with the bonding hypothesis, our estimates indicate that despite inertia, Delaware would lose significant market share and revenues if it adopted protectionist laws. (JEL G34, G38, K21, K22, L25, L51)