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Unlike other types of corporate disclosure, corporate political disclosure (CPD), which is the disclosure of corporate political contributions and the related governing policies and oversight mechanisms, does not provide completely new information to stakeholders. Some of the information disclosed in CPD is available from other public records (e.g. the Federal Election Committee website or OpenSecrets website). Given this unique feature of CPD, it is interesting to investigate the cost and benefit tradeoff for firms of altering their CPD practice in response to policy and political uncertainty.

This study employs recently developed indexes of aggregate economic policy uncertainty (EPU) and a novel dataset of CPD transparency to examine the impact of EPU on CPD transparency and how the proprietary cost of corporate political activities moderates this association. The sample consists of S&P 500 companies from the 2012 to 2019 period.

The authors document that firms mitigate the heightened information asymmetry associated with higher aggregate EPU by increasing CPD transparency. The positive association between EPU and CPD is less pronounced for firms that are more sensitive to EPU, for firms that more actively manage EPU through corporate political contributions or lobbying activities and for firms that are followed by more analysts. The authors also find that more transparent CPD helps to mitigate the information asymmetry caused by heightened EPU. This study’s results hold when the authors control for other types of voluntary corporate disclosure.

This study contributes to the emerging literature on the determinants of CPD transparency by identifying EPU's positive impact on CPD transparency. This study also provides empirical evidence that the proprietary costs arising from the controversial nature of corporate political activities dampen firms' incentives to provide transparent CPD in response to heightened EPU, and that information on corporate political activities gathered and processed by financial analysts seems to lower the marginal benefit to companies of publicizing CPD on their own website.

This case was researched using publicly available sources, including Mercury Systems financial filings and press releases, news stories about the seasoned equity offering, financial information from Bloomberg and industry information from IBISWorld Industry Reports and articles related to seasoned/secondary equity offerings, intangible asset valuation and the use of revolving lines of credit. Quotes are taken from Mercury financial reports and press releases and express the (optimistic) opinions of company executives.

Mercury Systems, a technology company in the aerospace and defense industry, announced a six million share seasoned stock offering in June 2019. This resulted in a 6% stock price decrease. A stock price decrease is a typical event when a firm announces the issuance of new common shares, but with Mercury Systems, there were concerns about how much money the firm needed to fund its strategy of growth through acquisitions. If internally generated funds were not sufficient, should the firm issue debt or have another seasoned equity issue? Students will look at the objectives and success of the most recent seasoned equity issue, determine future funds needs and how the firm should finance these needs.

This case is appropriate for undergraduate and graduate students in corporate finance electives. Typically, topics such as seasoned equity offerings are not covered in introductory courses, so this is recommended for finance electives. Even in advanced finance courses, sometimes there is insufficient time to cover seasoned equity offerings.

This study aims to explore the potential impact of country-level governance in corporate financing structures.

A two-step system generalized method of moment was used due to the endogeneity issue. The whole sample comprises 3,761 firms in five economies – China, India, Pakistan, Singapore and South Korea – from 2007 to 2016.

The results indicate that the debt option for financing is not favorable under governments with an adequate governance arrangement. However, there is a direct and significant link between country governance and equity financing because in adequate governance arrangements, the possibilities of information asymmetry are minimal and businesses consider equity a more appropriate and safer financing instrument. In contrast, firms prefer to trade-credit financing in poor governance economies, which confirms an adverse link between trade credit and adequate governance.

The country’s governance should be considered a sensitive matter when deciding about corporate financing.

This arrangement of variables has not been previously analyzed in the literature, suggesting the study’s novelty.

This public-sourced case describes the latest restructuring efforts by Deutsche Bank (DB) and gives a short history of prior restructuring efforts from the decade before. In July 2019, Christian Sewing, the new CEO of DB, announced a series of measures that included, among others, the elimination of global equity trading, the layoff of 18,000 employees, the creation of a “bad bank” to transfer noncore assets, and the suspension of dividends until 2022. The case describes key decisions a bank CEO makes when a bank needs to change course to return to profitability and growth. The case offers an opportunity to debate these key decisions, as well as discuss some of the prior ones during earlier restructuring efforts, and put the students in the CEO's shoes: What would you do and why? The case also describes key banking performance metrics (e.g., ROE, ROA) and other critical variables such as those reflecting capital health (Tier 1 ratio), as well as gives an overview of the bank business model and factors impacting bank profitability and value.

This study aims at proposing and testing a model delineating how and when the quality of a special B2B professional service, investment relations (IR), would drive corporate intangible value.

This study employs a proprietary dataset on voting records of an annual investment relations (IR) awards event and the corresponding company-level archival data for analysis. Regression analysis is used to test hypotheses.

IR service quality not only directly enhances corporate intangible value, but also indirectly boosts it via information transparency. While competitive intensity does not moderate the relationship between IR service quality and corporate intangible value, its moderating effect on the relationship between information transparency and this value is negative.

The findings advance academic understanding of the mechanism and boundary conditions underlying the complex and dynamic relationships among IR service quality, information transparency, corporate intangible value and competitive intensity. Future research endeavors to verify the present findings in other service and/or geographic settings would help establish their external validity.

The findings advise companies to expand the traditional role of IR by taking it as a powerful communication and relationship marketing tool to improve their visibility and attract investors.

The findings suggest that superior IR service would strengthen the company’s social bonding with institutional investors and effectively signal to them its commitment to good corporate governance practices.

Matching a proprietary dataset on IR voting records with the corresponding company-level archival data over a five-year period to investigate the performance implications of IR service quality within the Hong Kong context rectifies methodological limitation and geographic confinement of prior IR research.

The study aims to investigate market reactions associated with the JUST 100 rankings published by JUST Capital, a non-profit organization, as well as differences in financial reporting quality and performance between selected firms and their industry peers.

This study uses a sample of 431 firms selected as the 100 America’s Most Just Companies between 2016 and 2020 by JUST Capital. This study performs both an event study to determine whether the rankings are useful to investors and cross-sectional regression analyses on the characteristics of selected firms compared to their peers.

This study finds that investors react positively to selected firms around the time of the release of the JUST 100 rankings, suggesting that the rankings are decision-useful. This study also finds that selected firms exhibit higher accounting quality and financial performance than their peers.

Rankings may not be free from bias because of JUST Capital’s ownership of an exchange-traded fund.

The findings validate the rankings as well as the methodology used by JUST Capital, as they show market participants value firms that engage in socially responsible actions through their commitment to positively impact five key stakeholder groups: employees, customers, communities, environment and shareholders.

To the best of the authors’ knowledge, this is the first study that shows the importance of the JUST 100 rankings for investment decisions. Considering the growing push for companies to disclose environmental, social and governance (ESG) activities, this study provides evidence to support ESG disclosure regulations.

This paper aims to examine the antecedents of adoption intention of profit-sharing investment deposits (PSID) among Moroccan customers.

Applying an extended version of diffusion of innovation (DOI) theory and using a non-probability sampling technique with convenience approach, a quantitative survey was developed and administered to 171 Islamic banking users. Structural equation modeling was then used to evaluate the significance of relationships between the various variables under study using SPSS 21.0 and AMOS 26.0 statistical packages.

Empirical findings of the structural analysis indicated a significant direct relationship between adoption intention and six out of seven variables: perceived relative advantage, perceived compatibility, perceived complexity, perceived risk, religiosity and social influence, all of which had a significant effect on Moroccan customers’ intention to invest their funds in profit-sharing based deposit instruments, whereas customer awareness exerted an insignificant positive effect.

The absence of a longitudinal study tracking the actual adoption behavior is the main limitation of this study. Furthermore, data were collected solely from Islamic banking users. Finally, despite being insightful, the empirical findings should be generalized with caution since the sample was purposely selected by the banks’ management.

This study implied that participatory banks should pay substantial attention to risk perceptions, as PSID adoption intention is typically inhibited by high perceived risks associated with these products. Moreover, this study provides great indications to Moroccan regulators and policymakers on a number of issues related to this emerging business.

To the best of the authors’ knowledge, this paper represents the first attempt to confirm the effectiveness of the Rogers’ DOI in examining the intention to adopt a financial innovation in the Moroccan context. It is also the first of its kind to address customers’ apprehensions regarding profit-sharing investment products.

This chapter investigates the cost of public debt for firms using a comprehensive sample consisting of 17,368 industrial bond issues from 1970 to 2011. The empirical evidence shows that yield spreads for seasoned bond issues are significantly lower than those for initial bond issues. This seasoning effect is robust across different sample periods, subsamples, and model specifications. On average, the yield spreads for seasoned bond issues are around 50 bps lower than those for initial bond issues. This difference cannot be explained by other bond and firm characteristics. The seasoning effect is more pronounced for firms with higher levels of uncertainty, lower information disclosure quality, and longer time intervals between the first and subsequent issues. Our empirical findings provide supportive evidence for the extant theories that aim to rationalize the information role in determining the cost of capital.

We explore the impact of equity liquidity on a firm’s dynamic leverage adjustments and the moderating impacts of leverage deviation and target instability on the link between equity liquidity and dynamic leverage in the UK market.

In applying the two-step system GMM, we estimate our model by exploring suitable instruments for the dynamic variable(s), i.e. lagged values of the dynamic term(s).

Our analyses document that a firm’s equity liquidity has a positive impact on the speed of adjustment (SOA) of its leverage ratio back to the target ratio in the UK market. We also demonstrate that the positive relationship between liquidity and SOA is more pronounced for firms whose current position is relatively close to their target leverage ratio and whose target ratio is relatively stable.

This study provides important implications for both firms’ managers and investors. Particularly, firms’ managers who wish to increase the leverage SOA to enhance firms’ value need to give great attention to their equity liquidity. Investors who want to evaluate firms’ performance could also consider their equity liquidity and leverage SOA.

We are the first to enrich the literature on leverage adjustments by identifying equity liquidity as a new determinant of SOA in a single developed country with many differences in the structure and development of capital markets, ownership concentration and institutional characteristics. We also provide new empirical evidence of the joint effect of equity liquidity, leverage deviation and target instability on leverage SOA.

Inflation and federal monetary efforts to control it with interest rate hikes have very real and overwhelmingly negative consequences on US local governments following the onset of COVID-19. This study explores the post-pandemic inflationary environment of US local governments; examines the impacts of inflation and high interest rates on local government revenue, operating costs, capital costs, and debt service; reviews local government inflation management strategies, including the use of intergovernmental revenue; and assesses ongoing threats to local government financial health and financial resilience.

This study uses trend and literature analysis to comment on current issues local governments face.

The study finds that the growth of property values and resulting stability of property tax revenue has been important to local government revenues; that local governments bear very real burdens as operating and capital costs increase; and that the combination of high inflation and interest rates affects local government debt issuance by negatively affecting credit quality and interest costs, leading to municipal market contraction. Local governments have benefitted tremendously from intergovernmental revenue, but would be ill-advised to rely on it.

Vulnerabilities owing from revenue mismatch with the economy; inadequate affordable housing, inequality, and social issues; a changing workforce and tight labor market; climate change; and federal fiscal contraction—all of which are exacerbated by high inflation and interest rates—require local governments to act strategically, boldly and collaboratively to achieve fiscal health and financial resilience, and to realize positive returns of investments in people and capital.

This work is unique in addressing the post-pandemic impact of inflation and interest rates on local governments.