No abstract

We investigate the nature of the relationship between Corporate Social Responsibility (CSR) and Corporate Financial Performance (CFP) by examining how it changes across a third dimension that accounts for firm-specific factors. We propose a semi-latent specification of an endogenous control variable, which can, for the first time, explicitly identify, for each individual firm, the threshold level where the marginal impact of CSR on CFP turns positive. We provide empirical evidence that this threshold depends on the additional dimension and consequently, the previously reported U-shape seems to be an aggregation of relationships of differential magnitude and direction. This disaggregation fits the data better and therefore, we maintain that the addition of a higher dimension, along with the identification of the threshold level, can explain the conflicting results in the literature.

No abstract

Research Question/Issue: We examine the role of corporate executives in dividend tunneling activity by controlling shareholders and whether the correlation between executive ownership and dividend tunneling is influenced by internal and external governance mechanisms.Research Findings/Insights: We find increased executive ownership may lead to a higher level of dividend tunneling. This is further strengthened by our finding that the positive effect of executive ownership on dividend tunneling is more pronounced for firms with weaker minority shareholder protection. In addition, our results show that higher degrees of state ownership may further intensify this positive association.Finally, we find that analyst coverage has a moderating effect and constrains the collusion between controlling shareholders and executives in dividend tunneling activity.Theoretical/Academic Implications: Our study contributes to the literature on the role of managerial ownership in controlling shareholders' dividend tunneling activity.We fill a gap in the literature on the corporate agency problem by providing evidence that dividends have been employed by controlling shareholders as a means of tunneling and that executives with higher ownership are more likely to collude with controlling shareholders in dividend tunneling activities.Practitioner/Policy Implications: This study contributes to the debates around the promotion of the cash dividend policy in China, as our findings show that cash dividends are used as a tunneling vehicle. Providing important evidence to regulators, our findings support the argument that external monitoring by financial analysts can effectively constrain dividend tunneling by dominant shareholders, especially in the context of emerging stock markets with high ownership concentration, weak minority shareholder protection, and an underdeveloped legal system.