Research summary: Using collective action and social movement theory, we investigate the potential incentives and ability of stakeholders to engage in collective action that can increase firm-specific nonmarket risk of mining companies. We argue that proximity to the nearest environmentally sensitive water source increases the probability that local stakeholders will take collective actions that impose material costs on the focal mine. We hypothesize that stock markets recognize this nonmarket risk and apply a discount on announcements related to mines located near such areas, and that these risks are moderated by the type of mineral, the nature of the water source, and the strength of host country institutions. Using a unique data set and an event study method, we find support for most of our arguments. Managerial summary: We argue that mines located near environmentally sensitive water sources are subject to nonmarket risks arising from the potential collective actions of local stakeholders and their allies. Stakeholder mobilization can impose material costs on a mine in the form of delays, regulatory hurdles, and
In this paper, we investigate how firms' international expansion paths and their geographic scope differ across industries, with longitudinal data from 1999 to 2008 for Fortune Global 500 firms. We first classify firms into three generic paths of international expansion based on the industry characteristics (i.e., institution-driven, capability-driven, and linkage-driven). We then investigate the differences in three generic international expansion paths and geographic scope with descriptive and growth curve analyses. The results show that firms operating in an institution-driven industry mostly expand their upstream activity internationally, but their geographic scope is limited. In contrast, those firms in a capability-driven industry mainly expand their downstream international activities, potentially beyond a regional geographic boundary. Firms in a linkage-driven industry likely coordinate both upstream and downstream activities internationally, but with larger geographic scope in downstream activities than upstream activities. Thus, firms across industries have taken distinctive paths of international expansion with substantially different geographic scope of operation.
Using an event study method, we investigate whether capital markets price potential environmental risk for a crosscountry sample of mining firms. We find that firms whose mines are located close to environmentally sensitive areas are penalized but the penalty is higher if the mine is located in a country with high governance quality.
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