Social learning and corporate peer effects

Kaustia, Markku; Rantala, Ville

doi:10.1016/j.jfineco.2015.06.006

Cited by 226 publications

(114 citation statements)

References 56 publications

(40 reference statements)

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“…However, when extant research interprets its findings as consistent with social learning or competition, the primary means of distinguishing between the two is with theory. For example, Kaustia and Rantala (2015) argue that social learning explains stock splits because there is no relevant theory for why firms would split stock to maintain competitive parity. In contrast, the management literature has rigorously examined settings where social or competitive forces exist.…”

Section: Social Interaction Learning Effectmentioning

confidence: 99%

The Effects of Competition from S Corporations on the Organizational Form Choice of Rival C Corporations

Donohoe

Lisowsky

Mayberry

2019

Contemporary Accting Res

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Subchapter C of the U.S. Internal Revenue Code levies an entity‐level tax on corporate profits, whereas Subchapter S allows corporations meeting specific criteria to elect out of this tax. Despite these differences, C and S corporations regularly compete for customers and capital. We examine whether and the extent to which competition from S corporations influences the future organizational form choice of rival C corporations and explore outcomes of this choice. Using data for 4,462 private U.S. commercial banks grouped by Metropolitan Statistical Area during 1997–2010, we find that greater competition from S corporation banks increases the likelihood that rival C corporation banks convert to Subchapter S status. We estimate that the aggregate first‐year tax savings from S conversion exceed $372 million. Consistent with these savings being used to maintain competitive parity with rivals, we find that converting banks increase their interest rates on customer deposits and advertising intensity. Our findings provide insight into whether competition from tax‐advantaged firms influences the organizational form choice of rival tax‐disadvantaged firms.

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Section: Social Interaction Learning Effectmentioning

confidence: 99%

The Effects of Competition from S Corporations on the Organizational Form Choice of Rival C Corporations

Donohoe

Lisowsky

Mayberry

2019

Contemporary Accting Res

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“…Under such effect, an initial shock may bring about large change, as individuals or entities are directly influenced by each other's actions. Kaustia and Rantala (2015), observe that a recent stock split by the peer firms increases the chances that a firm also goes for splitting its stocks in the U.S. Moreover, such behavior shows that managers interpret stock split by peers, as a signal that nominal stock price has a positive association with firm value.…”

Section: Literature Review Peer Effects In Financementioning

confidence: 97%

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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“…Têm-se pesquisado também a influência dos pares em outros aspectos da firma como nas decisões de investimento (Foucault & Fresard, 2014), o seu valor de mercado (Carvalho, 2015) e split de ações (Kaustia & Rantala, 2015). Foucault & Fresard (2014) mostram que existe uma relação positiva entre valoração das ações dos pares e investimento das firmas a partir da hipótese que o valor dos pares é uma informação sobre oportunidades de crescimento.…”

Section: Revisão Teóricaunclassified

“…O autor mostra que qualquer choque nas ações dos pares terá um efeito no aumento ou redução da alavancagem das firmas em um momento de crise. Kaustia & Rantala (2015) também partem da hipótese de que os gerentes interpretam as decisões dos pares como oportunidades, assim, se os pares fazem split de ações a tendência é que as firmas do mesmo setor também façam, esperando obter algum benefício do gerenciamento do preço da ação. E quando os pares anunciam um retorno positivo após o split, a tendência de outras firmas na indústria fazerem o mesmo é o dobro de quando o resultado é negativo, o que seria uma aprendizagem organizacional a partir dos pares, mas em geral esta imitação não traz benefícios para as firmas que fazem depois.…”

Section: Revisão Teóricaunclassified

O setor como determinante da estrutura de capital: evidências após as alterações das alíquotas do IPI no Brasil

Oliveira

Kayo

2019

Braz. Rev. Fin.

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ResumoEste artigo utiliza as alterações de IPI realizadas pelo governo brasileiro como choques exógenos com o objetivo de testar a relação entre alavancagem da firma e do setor. Foram utilizados dados de empresas brasileiras entre 2007-2015. O modelo econométrico utilizado foi o diff-in-diff-in-diff. Os resultados mostram uma relação positiva entre a alavancagem média do setor e da firma e indícios que esta relação se mantém para o grupo de tratamento após a inclusão do choque exógeno de redução do IPI no modelo. Estes resultados se alinham com trabalhos que colocam o setor no centro dos aspectos influenciadores da estrutura de capital da firma.Palavras-chave: Estrutura de Capital; Setor; Choques exógenos. Código JEL: G32, G38. AbstractThis paper is an empirical investigation that uses IPI benefits (tax advantages) offered by the Brazilian government as an exogenous shock to the relationship between firm and industry leverage. We use data from Brazilian companies between 2007 and 2015. The econometric model rests on a diff-in-diff-in-diff approach. Results show a direct relationship between the mean industry leverage and the firm's leverage. The relationship remains for the treatment group after we include the exogenous shock of IPI reduction in the model. These results are in line with studies that consider the industry as the principal influence on a firm's capital structure.

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Social learning and corporate peer effects

Cited by 226 publications

References 56 publications

The Effects of Competition from S Corporations on the Organizational Form Choice of Rival C Corporations

The Effects of Competition from S Corporations on the Organizational Form Choice of Rival C Corporations

Peer effects, Financial Decisions and Industry Concentration

O setor como determinante da estrutura de capital: evidências após as alterações das alíquotas do IPI no Brasil

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