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Borderline firms whose bond rating has a plus or minus specification by a rating agency face a greater potential for an upgrade or downgrade by the agency. The authors examine the level of chief executive officer (CEO) power in firms with a plus or minus bond rating. The authors test whether CEOs of these firms become more or less powerful, along with the effect of corporate governance and existing bond rating.

The authors use a panel sample with 16,429 observations from 1992 to 2016 from the ExecuComp database.

The authors find that CEOs of borderline-rated firms tend to be less powerful, relative to firms with a non-proximate rating. This result is largely present in firms with a plus rating. The authors also find that our primary findings are mainly driven by firms with low bond ratings (i.e. below investment grade) or by firms with weak corporate governance. Lastly, the authors document that CEO personal characteristics (i.e. CEO age, gender and tenure) impact our findings.

First, firms in our sample are large public companies, and the external validity of our results to smaller firms that may also be private is unknown. Second, the Compustat database discontinued reporting bond rating data (i.e. S&P bond ratings) in 2017. Hence, the authors are unable to analyze the CEO power of borderline firms in years after 2016.

The study contributes to the larger debate on whether having powerful CEOs is beneficial to an organization or not, because prior research has examined the consequences of CEO power with mixed results. The authors document evidence to support the research stream that links CEO power to negative consequences.

The authors find that our primary results are enhanced in firms with weak corporate governance, which is consistent with prior research that finds effective governance may mitigate CEO power and agency problems between the CEO and the Board.

Prior research primarily uses CEO power as a driver for performance. Our study focuses on CEO power as a dependent variable, with the bond rating change proximity as a driver of CEO power. The authors believe that this helps develop a more comprehensive understanding of CEO power.

Service quality is generally considered to be an intangible and as such, it has received relatively little serious attention from managers and, until recently, researchers have not conducted rigorous studies in this field. Involves a detailed empirical analysis of service quality issues. The survey frame was a model of the gaps between service expectations and perceptions of services as delivered. “Service quality” was decomposed into a set of key attributes and gaps were identified which become a useful basis for considering how to focus service improvement initiatives.

The purpose of this study is to examine the impact of proximity to broad bond rating change on annual report reading difficulty.

We use regression analysis to examine the association between proximity to broad bond rating change and reading difficulty of annual report.

Using a large panel sample with 11,767 firm-year observations representing 1,474 unique US companies from 1994 to 2016, we find a significant positive relation between proximity to broad bond rating change and annual report reading difficulty, which suggests that the annual reports of borderline firms are difficult for stakeholders to read and understand.

By investigating whether and how borderline firms manipulate readability of annual reports, our study contributes to bond rating research in finance literature and disclosure quality research in accounting literature. To the best of our knowledge, this study is perhaps the first empirical study that directly tests the link between proximity to broad bond rating change and annual report readability. In particular, the majority of prior studies concentrate on the economic consequences of annual report readability, but few studies investigate the determinants of readability. Therefore, examining the impact of proximity to broad bond rating change on readability contributes to a more comprehensive understanding of annual report readability.

The purpose of this paper is to investigate the employee performance of firms with a plus or minus specification in their bond credit ratings (i.e. firms near a broad bond rating change) because prior research suggests that these borderline firms demonstrate different behavior, relative to firms that are not near a broad bond rating change.

The authors use regression analysis to test the research question.

The authors posit and find that employees work harder when their firms are borderline in the context of bond credit ratings. The authors obtain similar results using firms on the Standard and Poor’s CreditWatch list. The authors also find that the results become stronger for firms with higher ability managers or when firms are faced with a more volatile business environment.

The results suggest that managers of these borderline firms have stronger incentives to improve employee performance. The study contributes to the large research stream on bond rating in finance literature and the research stream on employee performance in management and accounting literature. Specifically, our findings not only strengthen the notion in Kisgen (2006) that borderline companies often show different behavior, compared to average companies, but also can lead to a more comprehensive understanding of the determinants of employee performance. The study, to the authors’ knowledge, is one of the few empirical studies that directly examine the employee behavior (i.e. performance) when their firms are at the borderline in the context of bond credit ratings.

THE ATTENTION which has been paid in both the lay and technical press to the Concorde has revealed the many problems associated with the design and construction of aircraft flying at supersonic speeds. They relate to both aerodynamic design and the materials of construction where, particularly for the latter, one of the main influencing factors is the high surface temperature caused by skin friction. In the case of the Concorde which, it is stated, has a mximum speed of Mach 2‐2 and will fly for some 60 per cent of the time at a cruising speed of Mach 2‐1, the airframe can still be made mainly from conventional aluminium alloy as are today's jets. But the surface temperature starts to rise rapidly as speed exceeds Mach 2‐2 and this will mean that before long aluminium alloys will have to be replaced by harder metals with higher weight‐to‐strength ratio, for example titanium or stainless steel alloys. At the same time it is known that surface temperatures will range from, say, minus 65°F to 450°F with some—areas e.g., engine mounts—well above 1000°F.

NOT perhaps the most vintage of Farnboroughs from the point of view of new aircraft and new technology, but undoubtedly one of the most successful in relation to the business done. Some fifteen major orders worth over £32½ million were announced, bringing the total order book for the industry this year to more than £782 million already. This exceeds by a handsome margin the new business won by the industry in any nine‐month period in the past, and it is expected that by the end of the year orders worth well over £800 million will have been received. Highlights of the new British hardware on show were the Hawker Siddeley Nimrod and production Harriers on the military side; the B.A.C. One‐Eleven 500, the Handley Page Jetstream, the Garrett‐engined Short Skyvan, and the Beagle Pups showed the resurgence of the industry's civil interests. The number of foreign aircraft that appeared, sponsored in the main by Rolls‐Royce, bore witness to the strength of Britain's aero engine and aircraft equipment industry, and further evidence of this was found in the exhibition proper with many examples of major items of equipment having been adopted for overseas markets. The overall impression at Farnborough was a new‐found confidence in the future of the industry exemplified by a more aggressive and effective export sales policy that has already proved our ability to deliver the goods. It is not possible to cover all the exhibits shown at Farnborough, but the report following describes many of the interesting items.

The purpose of this paper is to examine the impact of chief executive officer (CEO) power on corporate social responsibility (CSR) performance.

The authors use regression analysis to investigate the research question.

Using a 23-year panel sample with 1,574 unique US firms and 8,575 firm-year observations, the authors find a significant and negative relation between CEO power and CSR, suggesting that firms with more powerful CEOs engage in less CSR activities.

The results reveal that more powerful CEOs become less responsive to the needs of stakeholder groups, confirming the validity of the stakeholder theory of CSR.

IT IS OF INTEREST TO RECALL THAT while B.S. 210, issued in 1924 was the first British Standard covering mineral lubricating oils, this was not the first time that the British Standards Institution had paid attention to the petroleum industry. Earlier, in 1921 and 1923 motor spirit and benzol had been covered by B.S.121 and B.S.135 respectively. Shortly after B.S.210, further attention was paid to this field in general by the issue, in 1927, of B.S.148 and in 1929 of B.S.188. B.148 dealing with insulating oils for electrical purposes, has subsequently been revised but in the main is little changed even today. B.S.188 deals with the determination of viscosity in absolute units, a matter closely related to lubricants and of obvious interest to those engaged in lubricant testing and manufacturing control. It is in the process of revision and enlargement and a draft has just been issued for comment.

Daniel and Titman (1997) contend that the Fama‐French three‐factor model’s ability to explain cross‐sectional variation in expected returns is a result of characteristics that firms have in common rather than any risk‐based explanation. The primary aim of the current paper is to provide out‐of‐sample tests of the characteristics versus risk factor argument. The main focus of our tests is to examine the intercept terms in Fama‐French regressions, wherein test portfolios are formed by a three‐way sorting procedure on book‐to‐market, size and factor loadings. Our main test focuses on ‘characteristic‐balanced’ portfolio returns of high minus low factor loading portfolios, for different size and book‐to‐market groups. The Fama‐French model predicts that these regression intercepts should be zero while the characteristics model predicts that they should be negative. Generally, despite the short sample period employed, our findings support a risk‐factor interpretation as opposed to a characteristics interpretation. This is particularly so for the HML loading‐based test portfolios. More specifically, we find that: the majority of test portfolios tend to reveal higher returns for higher loadings (while controlling for book‐to‐market and size characteristics); the majority of the Fama‐French regression intercepts are statistically insignificant; for the characteristic‐balanced portfolios, very few of the Fama‐French regression intercepts are significant.

The purpose of this paper is to investigate the firm-specific anomaly effect and to identify market anomalies that account for the cross-sectional regularity in the Indian stock market. The paper also examines the cross-sectional return predictability of market anomalies after making the firm-specific raw return risk adjusted with respect to the systematic risk factors in the unconditional and conditional multifactor specifications.

The paper employs first step time series regression approach to drive the risk-adjusted return of individual firms. For examining the predictability of firm characteristics on the risk-adjusted return, the panel data estimation technique has been used.

There is a weak anomaly effect in the Indian stock market. The choice of a five-factor model (FFM) in its unconditional and conditional specifications is able to capture the book-to-market equity, liquidity and medium-term momentum effect. The size, market leverage and short-run momentum effect are found to be persistent in the Indian stock market even with the alternative conditional specifications of the FFM. The results also suggest that it is naï argue for disappearing size effect in the cross-sectional regularity.

Constrained upon the data availability, certain market anomalies and conditioning variables cannot be included in the analysis.

Considering the practitioners' prospective, the results indicate that the profitable investment strategy with respect to the small size effect is still persistent and warrants close-ended mutual fund investment portfolio strategy for enhancing the long-term profitability. The short-run momentum effect can generate potential profits given a short-term investment horizon.

This paper provides the first-ever empirical evidence from an emerging stock market towards the use of alternative conditional multifactor models for the complete explanation of market anomalies. In an attempt to analyze the anomaly effect in the Indian stock market, this paper provides further evidence towards the long-short hedge portfolio return variations in terms of a wide set of market anomalies that have been documented in prior literature.