Broad or Narrow Stakeholder Management? A Signaling Theory Perspective

To mitigate risk, should companies signal a broad range of environmental, social, and governance (ESG) initiatives or instead focus on only a few ESG issues? Drawing on signaling theory, we propose that a broad array of ESG initiatives generates not only signal consistency but also accelerating signal costs. Our empirical results support the resultant hypothesis of a curvilinear relationship between ESG scope and equity risk. In addition, this U-shaped curve seems to become steeper when firms face multiple media-reported ESG controversies. Overall, our study qualifies the conventional wisdom that firms can reduce equity risk by attending to a wide variety of stakeholders and highlights the moderating (signal-amplifying) impact of the firm’s media environment.

Equity Risk and Return across Hidden Market Regimes

The key to understanding the dynamics of stock markets, particularly the mechanisms of their changes, is in the concept of the market regime. It is regarded as a regular transition from one state to another. Although the market agenda is never the same, its functioning regime allows us to reveal the logic of its development. The article employs the concept of financial turbulence to identify hidden market regimes. These are revealed through the ratio of the components, which describe single changes of correlated risks and volatility. The combinations of typical and atypical variates of correlational and magnitude components of financial turbulence allowed four hidden regimes to be revealed. These were arranged by the degree of financial turbulence, conceptually analyzed and assessed from the perspective of their duration. The empirical data demonstrated ETF day trading profits for S&P 500 sectors, covering the period of January 1998–August 2020, as well as day trade profits of the Russian blue chips within the period of October 2006–February 2021. The results show a significant difference in regard to the market performance and volatility, which depend on hidden regimes. Both sample data groups demonstrated similar contemporaneous and lagged effects, which allows the prediction of volatility jumps in the periods following atypical correlations.

Employee mistreatment and information asymmetry

PurposeIn this paper, the author utilizes a unique hand-collected dataset of workplace lawsuits, violations and allegations to test the relation between employee mistreatment and information asymmetry.Design/methodology/approachThe author tests the impact of employee treatment on firms' information environment by utilizing the S&P 1500 firms of 17,663 firm-year observations, which include 2,992 unique firms and 5,987 unique CEOs between 2000 and 2016. These methods include panel fixed effects, as well as alternative measures of information asymmetry, event study and matched samples for further robustness tests.FindingsThe author finds that employee disputes exacerbate the information flow between insiders and outsiders. Further, the author reports that case characteristics, such as case outcome and case duration, aggravate that problem. The author documents that the positive relationship between employee mistreatment and information asymmetry is stronger for small firms and firms with smaller market power, as well as firms with a high level of equity risk.Originality/valueThis study is the first to investigate how employee relations influence a firm's information asymmetry. The author aims to contribute to the literature by studying (1) the relation between information asymmetry and employee mistreatment, (2) how firm characteristics affect the path from employee disputes to information asymmetry and (3) the influence of various other types of evidence of employee mistreatment beyond litigation on the information environment.

Determinants of Dividend Policy in India – Special Reference to Nifty 50 Companies

Dividend policy is the firm’s policy considered to structure the dividend payout of the shareholder of the company. Various factors are responsible for determining the dividend payout of the firm. In this research paper, we are exploring the determinants of the dividend policy of NSE, Nifty 50. This paper studies the impact of six basic variables on the dividend payout of NSE, Nifty 50 Index companies for the financial year 2015-16 to 2019-2020. These factors include liquidity, leverage, firm size, return on equity, risk and tax rate. Multiple regression analysis was used to study the impact of selected variables on the dividend policy of the companies under study. The results reveal that return on equity has a significant positive impact on dividend payout, whereas risk and tax rate have a significant negative impact.In contrast, there is a positive relationship and zero significance was found between liquidity and dividend payout and leverage and dividend payout. A negative relationship and no significance was found between the size of the firm and dividend payout. This means that liquidity, leverage and size of the firm failed to have any significant impact on the dividend payout of the companies under study.