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This study examines short selling as one external determinant of corporate tax avoidance. Prior research suggests that short sellers have information advantages over retail investors, and high short-interest levels are a bearish signal of targeted stock prices. As a result, when short-interest levels are high, managers have been shown to take actions to minimize the negative effect of high short interest on firms’ stock prices. Tax-avoidance activities may convey a signal of bad news (i.e., high stock price crash risk). We predict that, when short-interest levels are high, managers possess incentives to reduce firm tax avoidance in order to reduce the associated stock price crash risk. Consistent with this prediction, we find that short interest is negatively associated with subsequent tax-avoidance levels. This effect is incremental to other factors identified by prior research. We conclude that short selling significantly constrains corporate tax avoidance.

This chapter proposes three different definitions for the market power in the antitrust case, such as dynamic monopoly power, static monopoly power and market power.

The chapter presents simple economic models to analyse which definition of the three market powers is consistent with predatory pricing or tying.

The prerequisite market power is simply market power in the predatory pricing case or static monopoly power in the tying case.

Dynamic monopoly power defined as the market power from an antitrust perspective by the Antitrust Modernization Commission should not be the prerequisite market power in the case of the abuse of dominance or the violation of Section 2 of the Sherman Act.

A possession of substantial market power or monopoly power is typically understood as a prerequisite in abuse of dominance in Korea and EU or violation of Section 2 of the Sherman Act in the United States. However, the antitrust law does not clearly indicate the meaning of market power or monopoly power. This chapter proposes three different definitions for the market power in the antitrust case and analyses which definition of the three market powers is consistent with predatory pricing or tying.

Rainfall–runoff relationship is one of the most complex hydrological phenomena. A conventional neural network (NN) with backpropagation algorithm has successfully modelled various non-linear hydrological processes in recent years. However, the convergence rate of the backpropagation NN is relatively slow, and solutions may trap at local minima. Therefore, a new metaheuristic algorithm named as cuckoo search optimisation was proposed to combine with the NN to model the daily rainfall–runoff relationship at Sungai Bedup Basin, Sarawak, Malaysia. Two-year rainfall–runoff data from 1997 to 1998 had been used for model training, while one-year data in 1999 was used for model validation. Input data used are current rainfall, antecedent rainfall and antecedent runoff, while the targeted output is current runoff. This novel NN model is evaluated with the coefficient of correlation (R) and the Nash–Sutcliffe coefficient (E²). Results show that cuckoo search optimisation neural network (CSONN) is able to yield R and E² to 0.99 and 0.94, respectively, for model validation with the optimal configuration of number of nests (n) = 20, initial discovery rate of alien eggs (painitial) = 0.6, hidden neuron (HN) = 100, iteration number (IN) = 1,000 and learning rate (LR) = 1 for CSONND4 model. The results revealed that the newly developed CSONN is able to simulate runoff accurately using only precipitation and runoff data.

Drawing on Bourdieu's field, habitus, and capital, I show how disparate experiences and “dispositions” shaped several departments’ development in the organization behind the annual Burning Man event. Observations and interviews with organizers and members indicated that in departments with hierarchical professional norms or total institution-like conditions, members privileged their capital over others’ capital to enhance their authority and departmental solidarity. For another department, the availability of multiple practices in their field fostered disagreement, forcing members to articulate stances. These comparisons uncover conditions that exacerbate conflicts over authority and show how members use different types of capital to augment their authority.

Purpose – The purpose of this study is to investigate whether a firm’s cost structure (specifically, its cost stickiness) is associated with environmental, social, and governance (ESG) sustainability factors of performance and disclosure.

Methodology/approach – This study uses MCSI Research KLD Stats (KLD) and Bloomberg databases for the 13-year period from 2003 to 2015 in constructing ESG performance and disclosure variables, respectively. The authors adopt the general cost stickiness models from Anderson, Banker, and Janakiraman (2003) and Banker, Basu, Byzalov, and Chen (2016) to perform the analysis.

Findings – The authors find that a firm’s level of cost stickiness is positively associated with certain sticky corporate social responsibility (CSR)/ESG activities (both overall and when separately classified as strengths or concerns) but not with other nonsticky CSR activities. The authors also show that the association between cost stickiness and ESG disclosure is incrementally stronger for firms with CSR activities classified as sticky. Furthermore, the authors provide evidence that ESG disclosure is greater when both cost stickiness and the degree of sticky CSR activities increase. The authors show that when cost stickiness is high and CSR activities are sticky, management has incentives to increase CSR/ESG sustainability disclosure to decrease information asymmetry.

Originality/value – The findings present new evidence to understand how management integrates cost management strategies with various dimensions of sustainability performance decisions and show that not all ESG activities are equally effective when it comes to cost stickiness. The authors also demonstrate that increased sustainability disclosure helps reduce information asymmetry incrementally more when both costs are sticky and CSR activities are sticky.

This chapter introduces a risk control framework on credit card fraud instead of providing a solely binary classifier model. The anomaly detection approach is adopted to identify fraud events as the outliers of the reconstruction error of a trained autoencoder (AE). The trained AE shows fitness and robustness on the normal transactions and heterogeneous behavior on fraud activities. The cost of false-positive normal transactions is controlled, and the loss of false-negative frauds can be evaluated by the thresholds from the percentiles of reconstruction error of trained AE on normal transactions. To align the risk assessment of the economic and financial situation, the risk manager can adjust the threshold to meet the risk control requirements. Using the 95th percentile as the threshold, the rate of wrongly detecting normal transactions is controlled at 5% and the true positive rate is 86%. For the 99th percentile threshold, the well-controlled false positive rate is around 1% and 83% for the truly detecting fraud activities. The performance of a false positive rate and the true positive rate is competitive with other supervised learning algorithms.

We investigate the interaction of debt covenants and tax accounting on the adoption of Financial Interpretation No. 48 (FIN 48). We examine how firms respond to the potential tightening of covenant slack upon FIN 48 adoption and whether these actions are penalized by creditors and anticipated by equity markets. We find that upon FIN 48 adoption, the majority of sample corporate borrowers increase their tax reserves and reduce equity. Firms close to debt covenant violation were even more likely to increase tax reserves upon FIN 48 adoption; however, the size of the adjustment was relatively smaller, suggesting that the FIN 48 standards limited, but did not eliminate, firms use of discretion in reporting uncertain tax positions to avoid costly covenant violations. For firms near net worth debt covenant violation, the act of decreasing equity upon FIN 48 adoption imposes real economic costs, as the average cost of debt increased by 43 basis points. Finally, we extend prior research on the market response to FIN 48 by showing how the market response to FIN 48 adoption is a function of debt covenant slack and tax aggressiveness. Specifically, the cumulative abnormal return at the FIN 48 exposure draft release date is negative only for tax aggressive firms that are close to debt covenant violation.