Information ratings and capital structure

Pan, Lee-Hsien; Lin, Chien‐Ting; Lee, Shih-Cheng; Ho, Kung‐Cheng

doi:10.1016/j.jcorpfin.2015.01.011

Cited by 42 publications

(32 citation statements)

References 43 publications

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“…Yang et al (2017) also find that CSR statements can lower information asymmetry between firms and creditors, so that firms with CSR can maintain higher leverage, and lower the speed of leverage adjustment when their leverage is above the target leverage [8]. Gong and Ho (2016) indicate that CSR behavior can provide additional information for evaluating equity, in order to enhance the efficiency of stock prices in China [9]; meanwhile, Ho et al (2015) also find firms with high (low) information ratings incline to low (high) debt financing and leverage [10]. In the currently available literature, CSR behavior is of benefit to a firm's transparency; thus, firms with good CSR behavior enjoy lower information asymmetry with stakeholders.…”

Section: Introductionmentioning

confidence: 99%

Do Peer Firms Affect Firm Corporate Social Responsibility?

Yang

Zhu

2017

Sustainability

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Peer-firm strategies are a critical factor for corporate finance, and corporate social responsibility (CSR) is the main trend for evaluating the behavior of firms. On the basis of the connection between peer strategy and CSR, this paper explores the CSR strategies employed by a sample of Chinese firms during the 2008-2015 period. Our two main empirical findings are as follows. First, the CSR strategies of firms have a positive effect on their CSR behavior. Second, when there is the CSR gap between firms and peer firms, firms will feel the pressure from stakeholders and the public and improve the level of CSR performance. Our paper enriches empirical research on the CSR behavior of Chinese firms.

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Section: Introductionmentioning

confidence: 99%

Do Peer Firms Affect Firm Corporate Social Responsibility?

Yang

Zhu

2017

Sustainability

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“…The result holds when Delay2 is considered as an alternative measure of delay. Following Pan, Lin, Lee, and Ho (2015), we also consider CSRs, the standardized CSR ratings, defined as the difference between CSR and the average of CSR scores scaled by the standard deviation of CSR, as an alternative CSR measurement. A significantly negative pattern is also observed between CSRs and stock delay proxies, 1 R 2 restricted is the R 2 from Equation (1) restricting θ j (−n) = 0, ∀n ∈ [1,4] and R 2 unrestricted is the R 2 from Equation (1) with no restrictions.…”

Section: Descriptive Statisticsmentioning

confidence: 99%

“…Standardized CSR rating score defined as the difference between CSR and the average of CSR, scaled by the standard deviation of CSR for firm i at time t (Pan et al, 2015) CSR_C…”

Section: Csrsmentioning

confidence: 99%

Forecasting price delay and future stock returns: The role of corporate social responsibility

Gong

et al. 2019

Journal of Forecasting

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This paper investigates the role of corporate social responsibility (CSR) performance in forecasting companys' stock prices and future returns. The forecasting analysis identifies a negative association between CSR performance and proxies of price delay. The negative CSR–delay association is weak for state‐owned enterprises (SOEs) because of their politically oriented motivation of CSR activities, but significantly strong for non‐SOEs. Furthermore, we find that forecasting delayed firms is expected to have higher future returns. In particular, the returns premium is most attributable to the CSR component of delay, compared with the non‐CSR component. Taken together, these results suggest that CSR performance plays a positive role in enhancing stock price efficiency, and a potential explanation is that CSR performance can be considered as additional information for equity predictions.

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“…Kobayashi et al [44] indicated that disclosure of patent information can significantly reduce risk and produce a relatively low standard deviation of 9.25%; in other words, disclosure of patent information helps to reduce mispricing. However, some scholars who have conducted research using news reports have reported contradictory results [40,45,46]. It demonstrate that inaccurate news reports make investors more critical and less likely to invest, resulting in mispricing and deviations in company value.…”

Section: Information Disclosure and Mispricingmentioning

confidence: 99%

Information Disclosure Ranking, Industry Production Market Competition, and Mispricing: An Empirical Analysis

Wang

et al. 2019

Sustainability

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Improving the transparency of corporate information disclosure is a key principle of corporate governance in Taiwan. This study uses the information disclosure assessment system established by the information disclosure and transparency ranking system to explore whether information transparency can reduce the degree of mispricing. The study uses the data of 10,686 listed companies in Taiwan for the period from 2005 to 2014. We find that a higher information disclosure ranking (IDR) of rated companies corresponds to a more substantial reduction in the degree of mispricing. Moreover, we discover that product market competition affects mispricing in that smaller degrees of mispricing reflect greater exclusivity; this suggests that lower industry transaction and competition costs lead to less substantial mispricing. Finally, we observe that the effect of information disclosure score on the degree of mispricing is lower in more exclusive industries. Furthermore, a regression process using instrumental variables reveals that IDRs have the significant effect of reducing the degree of mispricing.

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Information ratings and capital structure

Cited by 42 publications

References 43 publications

Do Peer Firms Affect Firm Corporate Social Responsibility?

Do Peer Firms Affect Firm Corporate Social Responsibility?

Forecasting price delay and future stock returns: The role of corporate social responsibility

Information Disclosure Ranking, Industry Production Market Competition, and Mispricing: An Empirical Analysis

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