Peer effects in decision-making: Evidence from corporate investment

Chen, Shenglan; Ma, Hui

doi:10.1016/j.cjar.2016.11.002

Cited by 68 publications

(85 citation statements)

References 41 publications

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“…Similarly, in the case of Chinese firms, it is found that the interaction between peer firms and the level of competition is significant and positive (Chen & Ma, 2017). Thus, taking similar actions as competitors, no firm would fail or succeed relative to others.…”

Section: Industry Concentration and Peer Effectsmentioning

confidence: 86%

Peer effects, Financial Decisions and Industry Concentration

Zaighum

Karim

2019

SJOM

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Purpose- This article reviews literature related to peer effects and different financial decisions. It further summarizes the theory and motives that drive peer effects. Also, the study highlights the influence of industry concentration on peer interaction in financial decision making. This content analysis of scantily available peer effect literature has been performed to highlight the significance of peer effects in financial decision making like investment, cash holding, leverage and many more. Most of the existing peer effects literature focuses on the U.S. However, peer effects also occur in other countries but empirical evidence is comparatively limited. But, managers may take into consideration their industry peers especially if their firms are operating in highly competitive environments. Design/Methodology- Content analysis approach is applied to review prevailing financial literature on peer interactions and financial decisions with a special focus on industry concentration in explaining the peer effects. Practical Implications- As the prime focus of managerial decisions is to maximize the firm’s value. Hence, information about peers would be helpful in making better decisions, especially in highly competitive environments. Also, this review of selected literature provides pathways for future research in investigating the motives of peer effects.

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Section: Industry Concentration and Peer Effectsmentioning

confidence: 86%

Peer effects, Financial Decisions and Industry Concentration

Zaighum

Karim

2019

SJOM

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“…This analysis is also applied in Chen and Ma (2017) for the corporate investment decisions from Chinese companies listed from 1999 to 2013, using the same methodology applied by Leary and Roberts (2014). They provide a large literature linking stock return to investment decisions as well as the peer effects in investment decisions in developed and emerging countries.…”

Section: The Peer Effects Literature and Its Applications On Financiamentioning

confidence: 99%

“…For this approach, we need to construct the peer group variables, denoted ̅ − , as the average of all the firms in the peer group (denotate as j) except the firm i in year t like proposed by Chen and Ma (2017), Adhikari and Agrawal (2018) and Leary and Roberts (2014). We apply the equation 8for all peer variables in this analysis.…”

Section: Empirical Models and Econometric Strategymentioning

confidence: 99%

“…Following this approach, we divide our analysis in two steps: (i) the fixed effect models for the stock return and some of the peers' financial features as the exogenous effect from the reflection problem; and (ii) the use of the instrumental variable to estimate the 2SLS for panel data for the peer effect in stock returns. For the second step, we follow Leary and Roberts (2014), Chen and Ma (2017), and Adhikari and Agrawal (2018) and construct the instrumental variable as the idiosyncratic return from the CAPM augmented to include the peer factor.…”

Section: Introductionmentioning

confidence: 99%

“…In emerging ones, the impact is higher than in developed ones for all peer groups which leads us to believe that the co-movement in stock return depends on the macroeconomic environment and the period. Leary and Roberts (2014), Chen and Ma (2017) and Adhikari and Agrawal (2018) focus their peer effect analysis in the industry similarity and find evidences of peer effect for either the capital structure of the firm or the investment and dividend decision. Here, we also find evidences that the industry is an important link between the firms for the stock return models.…”

Section: Introductionmentioning

confidence: 99%

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The peer effects in asset price models: evidences from emerging and developed countries

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Does firms' ESG information disclosure have contagion effect? Evidence from China

Zhang,

You

2024

Corp Soc Responsibility Env

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The increasing concern of the society on environmental issues has driven research on environmental, social, and governance (ESG) issues. Among the existing academic studies on the influencing factors of ESG disclosure, few scholars have investigated the contagion effect of ESG disclosure, that is, whether the ESG disclosure behavior of peer firms affect the ESG disclosure of individual firms. Therefore, based on dynamic competition theory and social learning theory, this paper examines the contagion effect of ESG information disclosure from the perspective of peer relationship networks, using a sample of A‐share listed firms in China from 2009 to 2021. The study finds that there is a contagion effect in the level of firms' ESG disclosure, that is, when other firms in the same industry have a higher average ESG disclosure level, individual firm also tend to have a higher ESG disclosure level; and at the same time, this contagion effect is more pronounced among firms with state‐owned nature, a high degree of marketization, financing constraints and environmental uncertainty. By exploring the mechanism of its effect, we find that the contagion effect of ESG disclosure mainly originates from the competitive imitation mechanism and the information acquisition imitation mechanism. This paper theoretically enriches the research on the factors influencing the level of ESG disclosure and the contagion effect of inter‐firm behavior, and practically provides a reference for regulators to effectively supervise and improve firms' level of ESG disclosure.

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Peer effects in decision-making: Evidence from corporate investment

Cited by 68 publications

References 41 publications

Peer effects, Financial Decisions and Industry Concentration

Peer effects, Financial Decisions and Industry Concentration

The peer effects in asset price models: evidences from emerging and developed countries

Does firms' ESG information disclosure have contagion effect? Evidence from China

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