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This study aims to investigate the impact of strategic and institutional (normative) corporate social responsibility (CSR) on brand value and brand reputation, based on the strategic and legitimacy theory of CSR. It argues that because CSR strengths represent firms’ proactive approach to satisfy their stakeholders’ interests, the authors expect that this proactive approach is likely to generate an accumulated level of reservoir of goodwill that is positively related to the level of brand value. In contrast, the authors would expect that social irresponsibility (CSR concerns), as a measure of firms’ reactive position to stakeholders’ interests, adversely affects the incremental change in this reservoir of goodwill.

This paper measures strategic CSR using CSR strengths and normative (institutional) CSR from CSR concerns scores from the MSCI ESG (Kinder Lydenburg Domini). This paper measures the level of brand value from the Interbrand listing, and it measures the brand reputation based on changes in brand value and brand ranking from Interbrand’s 100 global brands.

This paper finds evidence to support the authors’ theory that one-, two- and three-year lagged CSR strengths positively affect the level of brand value. This study also finds empirical evidence to support the authors’ hypothesis that CSR concerns adversely affect changes in brand value and brand ranking. This study concludes that the differing impacts of CSR strengths and CSR concerns help the authors better understand the impacts of firms’ pro-action and reaction to stakeholders’ interests ion brand values and ranking.

The findings indicate that strategic CSR enhances brand value, while socially irresponsible activities that are against social norms, values and ethics adversely affect the companies’ legitimacy and adversely affect changes in brand reputation.

This research offers a new perspective to distinguish the differing impacts of CSR strengths and concerns on brand value and brand reputation.

This study aims to examine the impact of corporate culture, measured by corporate social responsibility (CSR), on the likelihood and severity of corporate fraud. CSR literature indicates that corporate managers are moral actors and are obliged to exercise their discretionary decisions according to their moral standards. Based on the moral development theory, this study argues that higher managers’ ethical values reflected by higher CSR activities are less likely to commit fraud and have lower severity of fraud.

This study argues that at the firm level, corporate culture can be measured by firms’ CSR activities. Using probit, match-pair, propensity matching and Heckman regressions on a sample of 152 criminal corporate fraud cases in the USA from the US Department of Justice (DOJ) during 2000 and 2010, this study empirically examines the impact of CSR, CSR strengths and concerns scores on the likelihood and the severity of corporate fraud.

Firms with higher CSR and CSR strengths (concerns) scores have lower (higher) likelihood and lower (higher) severity of corporate fraud. This study finds that firms with higher community, employee, environment and product-related CSR have lower likelihood of fraud, and firms with higher diversity, employee, environment and product-related CSR have lower fraud severity.

Establishing a positive corporate ethical culture is essential to curb the outbreak of corporate fraud that threatens our societal norms. The findings also shed some light for investors, corporate board of directors and regulators to consider CSR as a reflection of top managers’ moral values that is negatively related to the occurrence and severity of corporate fraud.

Strengthening moral values among top executives and employees in corporations by encouraging CSR activities aid our society to alleviate future outbreak of epidemic problem for corporate fraud.

This study brings a new perspective that there is a relationship between corporate ethical culture within an organization, measured by CSR activities, and corporate fraud based on the cognitive moral development theory in organization.

Drawing from social capital, social network theory of stakeholder influence and stakeholder management, the purpose of this paper is to examine the relationship between board network centrality and firms’ environmental, social and governance (ESG) performance.

Using social network analysis, the authors construct five board network centrality, namely, degree centrality (the number of connections), closeness centrality (distance among firms), eigenvector centrality (the quality of connections), betweenness centrality (how often a firm sits between two other firms) and the information centrality (the speed and reliability of information), as measures of board access for social capital and timely information.

Using a sample of non-financial firms listed in the UK FTSE 350 index from 2007 to 2018, the authors find that board networks, measured by degree, closeness, eigenvector, betweenness and information centrality, has positive influence on firms’ ESG performance. Furthermore, the findings show that there is a non-linear relationship between board networks and ESG performance, and this relationship is stronger in the sectors where firms that have high product market concentration and high percentage of women board members.

This study unveils that strong board network centrality brings higher social (reputational) capital and information advantages to the firm to effectively, timely and accurately deal with the pressures from stakeholders (stakeholder management), which leads to better ESG performance.

This study examines the market reaction to the World Health Organization (WHO) announcement of the novel coronavirus disease 2019 (COVID-19) as a global pandemic on the emerging equity markets and compares the reaction with developed markets. This study also compares the market reactions to the COVID-19 pandemic with the market reactions to the 2008 global financial crisis.

Using the Morgan Stanley Capital International daily stock indices data and the Carhart and the GARCH(1,1) models for an event study, the authors examine the cumulative abnormal returns during 30 and 10 trading days and the extended 60 days before and after the WHO pandemic announcement. It also compares the market reactions during the COVID-19 pandemic with the reactions to the Lehman Brothers' bankruptcy announcement during the 2008 global financial crisis.

This study finds that the COVID-19 pandemic had a significantly greater negative impact to the stock markets in emerging countries than in the developed countries. The negative impact on the emerging markets is more pronounced for firms with small market capitalizations and for growth stocks. The negative impact of the COVID-19 pandemic is stronger in the energy and financial sectors in both emerging and developed markets. The positive impact of the COVID-19 pandemic occurred in healthcare and telecommunications for the emerging markets and information technology for the developed markets. This study also finds that the equity markets in both emerging and developed countries recovered faster from the COVID-19 pandemic relative to the 2008 global financial crisis.

Investors' desire to diversify their risks across different countries and sectors in the emerging markets could bring superior returns. The diversification strategies bring critical financial supports to forestall the contagion of COVID-19, to protect lives, and to save the emerging economies, especially for those financially constrained countries that are facing twin health and economic shocks by channeling their investments to countries with weak healthcare systems.

This study extends the literature that examines market reactions to stock market shocks by examining the market reactions to the COVID-19 outbreak on the emerging and developed equity markets across different market capitalizations, valuation and sectors. This study also finds that the markets recovered quicker from the COVID-19 pandemic announcement than during the 2008 global financial crisis.

This paper aims to examine the relationship between the nationality and educational background diversity of directors serving on corporate boards and the firms’ corporate social performance (CSP).

This study measures nationality diversity by directors’ national citizenship and measures educational background diversity by countries from which they earned their undergraduate and post undergraduate degrees. It measures firms’ CSP using the MSCI ESG ratings. The study uses both univariate and multivariate analyses to empirically test the hypotheses.

Using a sample of US firms, the authors find that board nationality diversity and educational background diversity are positively associated with CSP. The findings suggest that improving director nationality diversity and educational background diversity could improve firms’ social performance.

This study shows that the increasing trend of foreign nationals in the US boards could shift the focus of US corporations to be more stakeholder-oriented.

This study examines the relationship between economic policy uncertainty (EPU) and managers' ex ante strategic choice on firms’ fixed and variable costs structure, i.e. cost rigidity and the moderating effect of government contracts and political connections.

Using a sample of 4,162 US firms during 2003–2019 and EPU measure from Baker et al. (2016), the authors examine the association between EPU and cost rigidity using multivariate regression analysis. The authors also examine the moderating effects of government customers and political connections using the subsampling method.

This study finds that increases in EPU leads to higher cost rigidity, suggesting that managers tend to look ahead and make an ex ante commitment to invest more in fixed costs to avoid congestion costs in anticipation of future product demand during EPU. The study also finds that the presence of government customers and political connections moderates the need for adopting greater cost rigidity.

This study measures firms' cost rigidity based on archival data. Future studies could utilize managers' cost structure choices using firms' internal management cost structure forecasts data to measure cost rigidity to examine the relationship between cost rigidity and EPU.

This study demonstrates that managers tend to make a proactive commitment to invest in fixed inputs when facing demand uncertainty from EPU to avoid congestion costs. This study also highlights the value of having government contracts and political connections by demonstrating that managers are less concerned about the congestion costs, hence weakening the impact of EPU on cost rigidity when they have government as major customers and/or political connections.

This study extends the management accounting literature by documenting that cost rigidity is related to EPU and that the relationship between cost rigidity and EPU also depends on whether the firm has government as major customers and/or political connections or not.

This study aims to examine the impact of COVID-19 public health restrictions on audit fees and audit delay at the auditor local office level.

The authors take advantage of the availability of the state-by-state lockdown data to measure the degree of public health restrictions in auditor office locations. Using multivariate regression analysis, this study empirically investigates the impact of the length of lockdown in auditors’ office locations on audit fees and audit delay. The authors also examine whether office-level characteristics (i.e. office size and office-level client importance) moderate the association between the length of statewide lockdown and both audit fees and audit delay.

The authors find that a longer lockdown in auditors’ office locations is associated with higher audit fees and longer audit delay. The increase in audit fees and audit delay due to lockdown is higher for clients of larger local offices than those of smaller offices. In contrast, the positive impact of lockdown on audit fees and audit delay is less for more economically significant clients of an auditor office than that for less significant clients. Smaller clients are more likely to bear the higher cost of audits and experience longer audit delay during the pandemic.

The results suggest that COVID-19 restrictions have forced auditors to change the nature, scope and timing of their tests, resulting in higher audit fees and longer delays in completing audit engagements. Beyond the main effect of lockdowns on audit fees and audit delay, the study finds evidence of the moderating effect of auditor office size and office-level client importance, providing some insights on how auditor local offices cope with COVID-19 restrictions.

This study aims to examine whether socially responsible firms have well-funded employee pension programs and whether corporate social responsibility (CSR) performance is associated with management discretionary choice of pension accounting assumptions.

The current study examines the impact of CSR performance on two measures of pension funding and two pension accounting assumptions using regression analysis. This study uses a panel data of 13,099 firms-years across 1,428 US firms from 1992 to 2015.

Firms with higher CSR scores report higher pension net assets and are less likely to have underfunded pension than their counterparts. These firms also adopt more responsible (conservative) pension accounting assumptions (i.e. lower discount rate and a higher rate of compensation increase) to estimate pension benefit obligations. Results are stronger for firms that operate in the materials and industrial sectors and for the post-2000 period when underfunded pension has become more prevalent. Firms with higher CSR scores are also less likely to have a pension freeze.

This study examines the signaling role of CSR by using the signaling theory to explain how senders view the signaling process as a channel to build their reputation and the correspondent inference theory to explain how receivers process and assess the signal. It provides evidence that the signal provided by CSR score is reliable in assessing firms’ commitment to non-investing stakeholders, such as employees, providing valuable information for potential employees making career decisions and for managers considering employee pension as part of corporate strategies to attract high quality workforce. This study provides inputs for public accountants providing assurance services that CSR performance has a significant impact on management reporting choices. This study also provides evidence that CSR could be considered a private provision of public goods that internalize the negative externality of the prevalent underfunded pension phenomenon.

The purpose of this study is to examine the impact of gender and ethnicity of CEO and audit committee members (directors) on audit fees and audit delay in the US firms.

Audit-related corporate governance literature has extensively examined the determinants of audit fees and audit delay by focusing on board characteristics, specifically board independence, diligence and expertise. The authors provide empirical evidence that gender and ethnicity diversity in corporate leadership and boardrooms influence a firm’s audit fees and audit delay.

This study finds that firms with female and ethnic minority CEOs pay significantly higher audit fees than those with male Caucasian CEOs. The authors also find that firms with a higher percentage of ethnic minority directors on their audit committee pay significantly higher audit fees. Further, the authors find that firms with female CEOs have shorter audit delay than firms with male CEOs and firms with a higher percentage of female and ethnic minority directors on their audit committee are associated with shorter audit delay. Results indicate that female CEOs and both female and ethnic minority directors are sensitive to the market pressure to avoid audit delay.

The results suggest that gender and ethnic diversity could improve audit quality and the firms’ overall financial reporting quality.

This study provides insights to regulators and policy-makers interested in increasing diversity within a firm’s board and top executives. Recently, the US Securities and Exchange Commission (SEC) and the European Commission have been pressing publicly traded companies to improve diversity among their directors. This study provides evidence and perspective on how diversity can enhance financial reporting quality measured by audit fees and audit delay.

Previous studies have not given much attention on the impact of racial ethnicity in addition to gender characteristics of top executives and audit committee directors on audit fees and audit delay.

Studies that examine the relationship of economic value added (EVA) to market value did not isolate the EVA effect in conjunction with controlling for the economic effect of the market. Since the EVA metric is viewed as value‐added apart from the market, operational managers will benefit from a procedure that separates the market driven versus firm driven (EVA) effects. Our paper examines the effects of the economy and EVA on MVA. The results indicate that EVA and GDP significantly affect MVA. Furthermore, the MVA‐EVA relationship shows a systematic bias between the largest MVA firms and the smallest MVA firms. Overall, our study provides implications for corporate executives utilizing EVA to evaluate managerial performance linked to MVA.