This study extends prior studies by analyzing how business strategies affect corporate social responsibility (CSR) engagement. Studies in the business strategy and compensation literature further investigate whether firms have superior CSR if they tend to align their compensation with their company's overall strategy. This tendency would tend to encourage firms to make their investment decisions on the basis of a long‐term sustainability development perspective. The data consist of a broad cross‐section of companies and industries in the United States for the 2003–2012 period. To avoid a potential endogenous effect, a two‐stage instrumental variables regression is also adopted in this study. It is found that the prospector business strategy has a strong positive association with CSR. In addition, CEOs with short‐term compensation have less incentive to invest in CSR if their firms adopt a defender strategy. The opposite is true for the prospector group, suggesting that sometimes, misfits may also produce good CSR outcomes.
This study explores whether SFAS No. 151 affects firms' production-level decisions. Although the change from ARB No. 43 (FASB 1953) to SFAS No. 151 (FASB 2004) seems trivial at first glance, using a sample of U.S. manufacturing firms from the Compustat database (SIC 2, 3) for the period 2003–2008, we document that abnormal production costs significantly increased after SFAS No. 151 became effective in 2005. The empirical evidence substantiates our hypothesis that the explicit expensing and reporting of idle facilities, as stipulated in SFAS No. 151, inadvertently further induces opportunism for excess production. Moreover, we find that firms that have limited options to indulge in accruals management, and those that have pressures to boost income, will have higher excess production after the adoption of SFAS No. 151. Supplementary analyses indicate that our results are robust with regard to controlling for sales manipulation, and to alternative explanations for excess production as well as alternative overproduction measures.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.