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Article
Publication date: 2 August 2021

Lee M. Dunham and John Garcia

This study examines the effect of firm-level investor sentiment on a firm's level of financial distress.

Abstract

Purpose

This study examines the effect of firm-level investor sentiment on a firm's level of financial distress.

Design/methodology/approach

The authors use Bloomberg's firm-level, daily investor sentiment scores derived from firm-level news and Twitter content in a beta-regression model to explain the variability in a firm's financial distress.

Findings

The results indicate that improvements (deterioration) in investor sentiment derived from both news articles and Twitter content lead to a decrease (increase) in the average firm's financial distress level. We also find that the effect of sentiment derived from Twitter on a firm's financial distress is significantly stronger than the sentiment derived from news articles.

Research limitations/implications

Our proxy for financial distress is Bloomberg's financial distress measures, which may be an imperfect measure of financial distress. Our results have important implications for market participants in assessing the determinants of financial distress.

Practical implications

Our sample period covers four years (2015–2019), which is determined by Bloomberg sentiment data availability.

Social implications

Market participants are increasingly using social media to express views on firms and seek information that might be used to determine a firm's level of financial distress. Our study links investor sentiment derived from social media (Twitter) and traditional news articles to financial distress.

Originality/value

By examining the relationship between a firm's sentiment and its financial distress, this paper advances our understanding of the factors that drive a firm's financial distress. To our knowledge, this is the first study to link US firms' investor sentiment derived from firm-level news and Twitter content to a firm's financial distress.

Details

Managerial Finance, vol. 47 no. 12
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 13 September 2021

Lee M. Dunham, Tirimba Obonyo and Sijing Wei

The purpose of this paper is to determine if Chief Executive Officers (CEOs) are rewarded or punished in the corporate director labor market for engaging in corporate…

Abstract

Purpose

The purpose of this paper is to determine if Chief Executive Officers (CEOs) are rewarded or punished in the corporate director labor market for engaging in corporate social responsibility (CSR) activities.

Design/methodology/approach

The authors empirically examine the relation between CEOs' CSR engagement and their corporate board appointments in retirement using logit, ordinary least squares (OLS) and Poisson regression models.

Findings

Results indicate that CSR engagement has significant director labor market consequences for retiring CEOs. Specifically, CSR engagement has a favorable impact on the ability of retired CEOs to obtain board seats and board seats at larger firms generally associated with higher pay, even after controlling for firm performance and other determinants previously documented to explain director selection. The authors also find evidence that CEOs of firms with high CSR engagement build up their firms' CSR scores over time as they approach retirement, which is consistent with the labor market for directors providing incentives to attract CEOs to board service in retirement.

Originality/value

By examining the relationship between a CEO's CSR engagement and their external corporate board directorships, this paper advances the understanding of the determinants of corporate board appointments. Further, while most prior research assesses the value of CSR engagement by looking at the relation between CSR engagement and that firm's performance, this is the first study to our knowledge to look outside the firm to determine if CSR engagement has value to the CEO.

Details

Managerial Finance, vol. 48 no. 1
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 24 April 2020

Lee M. Dunham and John Garcia

The purpose of this paper is to examine the effect of firm-level investor sentiment on a firm's share liquidity.

Abstract

Purpose

The purpose of this paper is to examine the effect of firm-level investor sentiment on a firm's share liquidity.

Design/methodology/approach

The authors use Bloomberg's firm-level, daily investor sentiment scores derived from firm-level news and Twitter content in a regression model to explain the variability in a firm's share liquidity.

Findings

The results indicate that improvements (deterioration) in investor sentiment derived solely from Twitter content lead to a decrease (increase) in the average firm's share liquidity. Results, although not as strong, are opposite for investor sentiment derived solely from news articles: improvements (deterioration) in news sentiment leads to an increase (decrease) in the average firm's share liquidity.

Research limitations/implications

The proxy for share liquidity is the bid-ask spread, which may be an imperfect measure of liquidity. The Amihud illiquidity measure was used as an alternative proxy and yield similar results. The results have important implications for investors in assessing the determinants of share liquidity.

Practical implications

The sample period covers four years (2015–2018), which is determined by the availability of the Bloomberg sentiment data.

Social implications

Investors increasing use of social media to express views on particular stocks and seek information that might be used in the investment decision-making process. The study links investor sentiment derived from social media (Twitter) to share liquidity.

Originality/value

By examining the relationship between a firm's sentiment and the firm's share liquidity, this paper advances the authors' understanding of the factors that drive a firm's share liquidity. To the authors' knowledge, this is the first study to link investor sentiment derived from firm-level news and Twitter content to a firm's share liquidity.

Details

Managerial Finance, vol. 47 no. 1
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 7 January 2014

Richard A. DeFusco, Lee M. Dunham and John Geppert

– The purpose of this paper is to examine the dynamic relationships among investment, earnings and dividends for US firms. The sample period is 1950-2006.

1477

Abstract

Purpose

The purpose of this paper is to examine the dynamic relationships among investment, earnings and dividends for US firms. The sample period is 1950-2006.

Design/methodology/approach

The authors use a firm-level vector auto-regression (VAR) framework to examine the firm-level dynamics among investment, earnings and dividends. The firm-level VAR yields Granger causality results, impulse response functions, and variance decompositions characterizing the dynamics of these three variables at the firm level.

Findings

For the average firm in the sample, Miller and Modigliani dividend policy irrelevance is not supported, even in the long run; the shocks to dividends do have long-run consequences for investment and vice versa. Dividend changes are an ineffective signal of future earnings in both the short and long-term. The cost of an increased dividend is on average an immediate decrease of $3 in investment for every dollar increase in dividends and the effect is persistent up to six years after the increase in dividends.

Research limitations/implications

The firm-level VAR used in the study requires that sample firms have long histories of investment, earnings and dividend data. The study addresses the interaction between dividends and investment and therefore necessitates examining dividend-paying firms. By the nature of the research question, the sample firms will not be representative in all respects to the universe of firms. The most striking difference between the sample and the universe of firms is firm size. As such, the study's conclusions are most applicable to larger, stable, dividend-paying firms. The study is also limited to dividend payout. Alternative payout policies, such as share repurchases, are not considered in this work.

Practical implications

In theory, increases in dividends can signal higher future earnings; however, the evidence does not support this hypothesis. When capital markets are constrained or incomplete, increases in dividends come at a cost to investment. Firms should consider alternative methods of signaling future earnings that have less of an impact on investment. Investors should carefully evaluate the possible impact of an increase in dividends on investment and future earnings growth.

Originality/value

This study is the first to examine the dynamics of earnings, dividends and investment at a firm level and over such a long sample period. By including the dynamics of earnings, the authors emphasize the potential opportunity costs that increasing dividends has on investment when capital markets are imperfect. The dynamic system also allows the authors to consider long-run effects as well as immediate responses to system shocks.

Details

Managerial Finance, vol. 40 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

Book part
Publication date: 1 January 2012

Anne S. York, Lee M. Dunham and Mark Ahn

Declining productivity and disappointing lack of profitability after three decades of biotechnology commercialization, despite enormous investment and the great promise of…

Abstract

Declining productivity and disappointing lack of profitability after three decades of biotechnology commercialization, despite enormous investment and the great promise of breakthrough solutions, have led researchers to question whether traditional horizontal acquisition strategies result in superior firm performance. Our chapter explores the answer to this question as well as to the role that disclosure plays in this important emerging industry. Using standard event study methodology, we examine differences in market performance of vertical versus horizontal acquisition strategies, along with the role played by the amount of information disclosed in the announcement. Our results suggest that vertical acquisitions underperform horizontal acquisitions, with the amount of disclosure playing a role in the market's ability to react to a firm's acquisition strategy accurately and quickly. Our results suggest that accountants who have called for additional disclosure, especially in complex industries such as biopharma, are correct in assuming that nonfinancial information plays a significant role in investors’ valuation of an acquisition event. Managers of biopharma firms, however, are cautioned that more disclosure, through the reduction of uncertainty, may result in lower market valuations for acquirers.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-78052-196-1

Book part
Publication date: 1 January 2012

Abstract

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-78052-196-1

Article
Publication date: 1 January 1983

Janet L. Sims‐Wood

Life studies are a rich source for further research on the role of the Afro‐American woman in society. They are especially useful to gain a better understanding of the…

Abstract

Life studies are a rich source for further research on the role of the Afro‐American woman in society. They are especially useful to gain a better understanding of the Afro‐American experience and to show the joys, sorrows, needs, and ideals of the Afro‐American woman as she struggles from day to day.

Details

Reference Services Review, vol. 11 no. 1
Type: Research Article
ISSN: 0090-7324

Book part
Publication date: 13 August 2018

Robert L. Dipboye

Abstract

Details

The Emerald Review of Industrial and Organizational Psychology
Type: Book
ISBN: 978-1-78743-786-9

Book part
Publication date: 23 May 2017

Ronald K. Mitchell, Jae Hwan Lee and Bradley R. Agle

In this chapter, we update stakeholder salience research using the new lens of stakeholder work: the purposive processes of organization aimed at being aware of…

Abstract

In this chapter, we update stakeholder salience research using the new lens of stakeholder work: the purposive processes of organization aimed at being aware of, identifying, understanding, prioritizing, and engaging stakeholders. Specifically, we focus on stakeholder prioritization work — primarily as represented by the stakeholder salience model — and discuss contributions, shortcomings, and possibilities for this literature. We suggest that future research focus on stakeholder inclusivity, the complexity of prioritization work within intra-corporate markets, the integration of stakeholder prioritization with other forms of stakeholder work, and the development of managerial tools for multiobjective decision making within the strategic management context.

Details

Stakeholder Management
Type: Book
ISBN: 978-1-78714-407-1

Keywords

Content available
Book part
Publication date: 29 November 2019

Richard E. Killblane

Abstract

Details

Delivering Victory
Type: Book
ISBN: 978-1-78754-603-5

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