Search results

1 – 10 of over 6000
To view the access options for this content please click here
Article
Publication date: 15 April 2019

Yan Luo and Linying Zhou

The purpose of this paper is to investigate the empirical association between the tone of earnings announcements and a company’s membership in a sin industry.

Abstract

Purpose

The purpose of this paper is to investigate the empirical association between the tone of earnings announcements and a company’s membership in a sin industry.

Design/methodology/approach

This study constructs a model of the determinants of earnings announcement tone to examine the impact of sin industry membership on earnings announcement tone. An interaction term between CEO power (CEO–chairman duality) and sin industry membership is used to test whether CEO power moderates the strength of the association. The earnings announcements tone is measured using the spread in the proportion of positive and negative words. The category of sin industry includes not only industries such as tobacco, gambling and alcohol, but also industries associated with emerging environmental, social, and ethical issues (i.e. firearms, oil and cement).

Findings

The analysis of a sample of US firms from the 1994 to 2013 period shows that the tone of earnings announcement is less optimistic for companies in sin industries, but this association is weaker for companies that are led by powerful CEOs. The results remain robust to alternative definitions of sin industry membership and CEO power (CEO tenure) and to alternative model specifications.

Originality/value

The findings suggest that although sin companies cannot change the nature of their business, the management of such companies, in general, uses a less aggressive tone in their earnings announcements. These results further investors’ understanding of sin companies’ reporting behavior.

Details

Asian Review of Accounting, vol. 27 no. 2
Type: Research Article
ISSN: 1321-7348

Keywords

Content available
Article
Publication date: 21 September 2021

Asahita Dhandhania and Eleanor O'Higgins

The purpose of this study is to examine the ways that sin industry companies attempt to utilise CSR reporting for legitimation.

Abstract

Purpose

The purpose of this study is to examine the ways that sin industry companies attempt to utilise CSR reporting for legitimation.

Design/methodology/approach

Conventional and summative content analyses were carried out on annual CSR reports in UK tobacco and gambling companies, juxtaposed against analysis of the actual behaviour of the companies, collectively and individually.

Findings

The paper concludes that there is an ongoing tension between the business of sin industry companies and their attempts to establish and maintain any legitimacy, using CSR reporting in particular ways to try to prove their credentials to society and to engage salient stakeholder support. Ultimately, they aim to give themselves the scope for strategic choice to enable survival and financial flourishing.

Research limitations/implications

Further research on CSR on other sin industries and in other jurisdictions with different regulatory situations could shed further light on the achievement or denial of different types of legitimacy. Studying different time periods as industries change would be of value.

Practical implications

On a practical basis, the study offers guidelines to stakeholders on the use of CSR reports from sin companies, and suggests the establishment of objective external CSR reports, overseen by accounting regulators.

Social implications

The paper provides an overview of the role of sin industries in society, and mitigating their harms.

Originality/value

This study allowed for a comprehensive, dynamic and inclusive understanding of the interplay of CSR reporting and legitimacy by addressing conflicting interests between sin companies' social effects and inherent activities at the industry level. The methodology of multiple case study design in two sin industries combined content analysis of CSR reports, juxtaposed against analysis of behaviour in context. Previous research included the juxtaposition of actuality in analysis of only single case studies or particular issues. Thus, this research allows for a broader industry understanding. On a practical basis, the study offers guidelines to stakeholders on the use of CSR reports from sin companies, and suggests the establishment of objective external CSR reports, overseen by accounting regulators. At the social level, the paper provides an overview of sin industries in society, and mitigating their harms.

Details

Accounting, Auditing & Accountability Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0951-3574

Keywords

To view the access options for this content please click here
Article
Publication date: 12 April 2018

Hanene Ezzine and Bernard Olivero

The authors provide evidence for the effects of social norms on corporate governance risk by studying “sin” stocks publicly traded companies involved in producing alcohol…

Abstract

Purpose

The authors provide evidence for the effects of social norms on corporate governance risk by studying “sin” stocks publicly traded companies involved in producing alcohol, firearms, biotechnology, gambling, military, nuclear power and tobacco. There is a societal norm against funding operations that promote vice and expropriation by controlling shareholders.

Design/methodology/approach

The sample is representative of S&P 500 firms in 2014. The authors use Datastream to obtain a sample of sin stocks. The authors’ descriptive analysis is completed by four variations of the basic ordinary least squares regression model according to dependent variable corporate governance risk score.

Findings

The authors find that non-financial incentives alone do not explain corporate governance risk. The authors provide strong empirical support for an alignment of financial and non-financial incentives. The authors show that when sin firm’s current performance is good, suggesting that the market holds a positive belief in firm’s future profitability, managers will likely have more incentive to expropriate shareholders.

Research limitations/implications

Belonging of firm to a sin industry does not reflect the acceptance level of social norms. The evolution of social norms towards sin stocks overcomes the drawback of assuming a constant social norms level over time. Therefore, researchers are encouraged to use the changes in consumption of sin products as a proxy for the evolution of social norms and examine does sin matter in corporate governance issue in other countries.

Practical implications

Well-planned and well-managed philanthropy sin industries to creating education programmes for the disadvantaged to protecting the environment, in the name of corporate social responsibility has become a necessary ingredient in virtually every large corporation’s business plan.

Originality/value

This paper fulfils an identified need to study does sin matter issue in corporate governance issue.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 11 no. 3
Type: Research Article
ISSN: 1753-8394

Keywords

To view the access options for this content please click here
Article
Publication date: 6 August 2018

Zenu Sharma and Liang Song

The purpose of this paper is to examine corporate social responsibility (CSR) practices of SIN firms. SIN firms are firms from controversial sectors such as tobacco…

Abstract

Purpose

The purpose of this paper is to examine corporate social responsibility (CSR) practices of SIN firms. SIN firms are firms from controversial sectors such as tobacco, alcohol, gambling and firearms.

Design/methodology/approach

This paper explains contrasts CSR practices of SIN firms with similar size and industry non-SIN counterparts.

Findings

This paper shows that SIN firms conduct more CSR practices than non-SIN firms. This paper also finds that CSR practices of SIN firms are value relevant only when these firms are performing below their peers.

Originality/value

The motivation for SIN firms to engage in higher CSR is the competitive advantage hypothesis and not moral rebalancing.

Details

Asian Review of Accounting, vol. 26 no. 3
Type: Research Article
ISSN: 1321-7348

Keywords

To view the access options for this content please click here
Article
Publication date: 8 May 2018

Daniel Liston-Perez and Juan Pablo Gutierrez

The purpose of this paper is to examine the temporal impact of individual and institutional investor sentiment on sin stock returns.

Abstract

Purpose

The purpose of this paper is to examine the temporal impact of individual and institutional investor sentiment on sin stock returns.

Design/methodology/approach

The authors estimate vector autoregressive models (VARs) to assess the dynamic relationships amongst pure sin returns and both types of investor sentiment. The justification for estimating VARs is that it allows one to study the potential influence that shocks (i.e. innovations) in individual and institutional investor sentiment might have on pure sin returns over time. Sin stock returns are separated into a market-based and pure sin component. Additionally, the authors split both measures of investor sentiment into rational- and irrational-based components.

Findings

This study finds that shocks to both individual and institutional rational-based sentiment positively influence pure sin returns for up to four months. However, irrational-based shocks have a positive, weaker and insignificant effect on pure sin returns. In addition, the results for the pure sin portfolio are compared to the S&P 500 and a comparables portfolio. The results show that sin stocks are less responsive than the S&P and the comparables portfolio to shocks in investor sentiment.

Originality/value

This study addresses some of the limitations found in the only prior study of sin stocks and investor sentiment (Perez Liston, 2016). Specially, this study investigates the link between sin stocks and sentiment in a dynamic context and also focuses the analysis on pure sin returns.

Details

International Journal of Managerial Finance, vol. 14 no. 5
Type: Research Article
ISSN: 1743-9132

Keywords

To view the access options for this content please click here
Article
Publication date: 11 September 2017

Greg Richey

The purpose of this paper is to investigate the return performance of a portfolio of US “vice stocks,” firms that manufacture and sell products such as alcohol, tobacco…

Downloads
1019

Abstract

Purpose

The purpose of this paper is to investigate the return performance of a portfolio of US “vice stocks,” firms that manufacture and sell products such as alcohol, tobacco, gaming services, national defense and firearms, adult entertainment, and payday lenders.

Design/methodology/approach

Using daily return data from a portfolio of vice stocks over the period 1987-2016, the author computes the Jensen’s α (capital asset pricing model (CAPM)), Fama-French Three-Factor, Carhart Four-Factor, and Fama-French Five-Factor results for the complete portfolio, and each vice industry individually.

Findings

The results from the CAPM, Fama-French Three-Factor Model, and the Carhart Four-Factor Model show a positive and significant α for the vice portfolio throughout the sample period. However, the α’s significance disappears with the addition of the explanatory variables from the Fama-French Five-Factor Model.

Originality/value

The author provides academics and practitioners with results from a new model. As of this writing, the author is unaware of any articles published in peer-reviewed academic journals that investigate vice stocks within the framework of the Fama-French Five-Factor Model (2015). First, the existing literature does not shed light on the relationship between “profitability” and “aggressiveness” (the fourth and fifth factors of the Fama-French Model) and vice stock returns. Second, within the framework of the Fama-French Five-Factor Model, the author shows results not only from a portfolio of vice stocks, but from various vice industries as well.

Details

Managerial Finance, vol. 43 no. 9
Type: Research Article
ISSN: 0307-4358

Keywords

To view the access options for this content please click here
Article
Publication date: 3 April 2017

Timothy Coombs

Graphic novels have a concept known as the origin story. The origin story is background information on how a hero or villain came into being. The purpose of this paper is…

Downloads
1101

Abstract

Purpose

Graphic novels have a concept known as the origin story. The origin story is background information on how a hero or villain came into being. The purpose of this paper is to explore the origin story of corporate social responsibility at British American Tobacco (BAT). The CSR origin story is unpacked by examining corporate documents from BAT that discuss the initial development of the company’s CSR program. The BAT documents are part of the Legacy Tobacco Documents Library (LTDL), a searchable, digital archive developed and managed by the University of California, San Francisco. It contains 85,569,326 pages in 14,360,422 documents. The library was created as part of the tobacco company settlement of a major law suit in the USA.

Design/methodology/approach

For this case study, the authors searched the archive for documents from BAT that had the key words “corporate social responsibility.” The documents were then analyzed using qualitative content analysis to identify key themes related to BAT’s created of its CSR programs.

Findings

The two dominant themes were business case BAT made for CSR and the environmental factors that shaped CSR. The business case had sub-themes of the new operating environment and reinforcing employees. The environmental sub-themes were the importance of NGOS and the top issues to be addressed in CSR efforts. The themes helped to explain why BAT was engaging in CSR, the factors shaping the start of its CSR programs, and the issues it intended to address through CSR.

Research limitations/implications

The analysis is limited to one organization and does not include interviews to go with the archived documents.

Practical implications

The paper considers the implications of the analysis for theory and practice for internal CSR communication.

Originality/value

The documents provide a rare glimpse inside a corporate decision to begin a CSR program and how the managers “talked” about CSR. Instead of examining external CSR communication, it examines the early days of internal CSR communication at a specific firm. The yields of the document analysis provide insights into how BAT conceptualized CSR and communicated the rationale for creating a CSR program internally. Research has relied primarily upon speculation of corporate motives or corporate public discourse designed to frame their CSR efforts. The internal documents provide an unfiltered examination of the motives for a CSR program. This allows us to better understand why a CSR program was created including the motives, targets, and desired outcomes.

Details

Corporate Communications: An International Journal, vol. 22 no. 2
Type: Research Article
ISSN: 1356-3289

Keywords

To view the access options for this content please click here
Article
Publication date: 17 July 2019

Abdelmajid Hmaittane, Kais Bouslah and Bouchra M’Zali

This paper aims to examine whether corporate social responsibility influences the cost of equity capital of firms operating in controversial industry sectors.

Abstract

Purpose

This paper aims to examine whether corporate social responsibility influences the cost of equity capital of firms operating in controversial industry sectors.

Design/methodology/approach

This paper computes the ex-ante cost of equity capital implied in analyst earnings forecasts and stock prices for a sample of 2,006 US firm-year observations belonging to controversial industry sectors (alcohol, tobacco, gambling, military, firearms, nuclear power, oil and gas, cement and biotechnology) during the period 1991-2012. The baseline regression model links CSR score to the implied cost of equity capital (ICC) and controls for firm-specific characteristics, industry factors and economic or market-wide factors. This model enables to capture the differential effect of CSR on ICC when the firm belongs to a specific sector of the controversial industries by adding an interaction term between CSR and the dummy variable representing this belonging.

Findings

The findings show two main results. First, CSR engagement significantly reduces the implied cost of equity capital (ICC) in all controversial industry sectors, taken as a group, as well as in each one of these sectors individually. Second, this effect is more pronounced when the firm belongs to the alcohol and tobacco industry sectors.

Practical implications

The findings have two important practical implications. First, they should increase managers’ confidence and incentives, in controversial industry sectors, to pursue CSR activities. Second, policymakers can encourage managers to undertake CSR initiatives in controversial industry sectors through tax incentives (e.g. reduce taxes for CSR related investment projects).

Originality/value

This paper extends prior studies that investigate the perceptions of capital market participants of firm’s CSR commitment (Sharfman and Fernando, 2008; Goss and Roberts, 2011; El Ghoul et al., 2011; Jo and Na, 2012; Bouslah et al., 2013) by examining the effect of CSR on ICC in the controversial industry sectors. It contributes to the debate around the relevance of CSR in controversial sectors by providing evidence of the reduction effect of CSR activities on ICC in controversial industries and by showing that this reduction impact is more pronounced when the firm belongs to alcohol, tobacco industry sectors.

Details

Review of Accounting and Finance, vol. 18 no. 4
Type: Research Article
ISSN: 1475-7702

Keywords

To view the access options for this content please click here
Article
Publication date: 31 December 2020

Antonios Chantziaras, Emmanouil Dedoulis, Vassiliki Grougiou and Stergios Leventis

Corporate social responsibility (CSR) reporting has been theorized as a key communication device and an integral part of a broader stakeholder integration management…

Abstract

Purpose

Corporate social responsibility (CSR) reporting has been theorized as a key communication device and an integral part of a broader stakeholder integration management strategy. This paper aims to examine the relationship between CSR disclosures and organized labor, an important internal stakeholder, whose institutional role in dynamically advancing employee interests creates opportunities and challenges for strategic management and firm sustainability.

Design/methodology/approach

By using a sample of 2,526 US firm-year observations for the period 2002–2015, the authors demonstrate that managers in unionized contexts are more likely to issue CSR reports than managers in firms, where labor is not organized.

Findings

The authors demonstrate that managers in unionized contexts are more likely to issue CSR reports than managers in firms where labor is not organized. Considering stakeholder theory, they argue that, in unionized contexts, managers more intensively resort to CSR disclosures to form an alignment of interests, develop collaborative bonds with unions and smoothen relationships with external financial stakeholders. This effect is more prominent in areas where corporate spatial clustering and the prevailing political ideology facilitate the role of unions.

Research limitations/implications

First, the data refer to USA, which may limit the generalization of the results. Hence, researchers could use cross-country datasets to overcome this limitation. Second, it would be important to know what benefits are enjoyed by the unionized companies that issue CSR reports. Third, they acknowledge that there is useful qualitative information they do not analyze. This analysis could potentially relate specific CSR information to unions’ needs and demands. Further, there are alternative channels through which companies disclose relevant information such as 10-K filings, annual reports, firm websites, media, public announcements, etc. These are not captured by the data.

Practical implications

Managers could benefit from the empirical analysis, which suggests that through the initiation of CSR reports a dialogue with unions is greatly facilitated. Managers should consider that CSR reports reduce information asymmetries and may attract the interest of investors. Unionists should be aware that CSR reports constitute an opportunity to identify mutual interests and align goals. Business analysts, investors and shareholders should be aware that standalone CSR reports are used by managers to reduce information asymmetries and disparities with unions and to communicate an investment-friendly context. So, market participants should factor such policies by unionized firms into their investment analyses.

Social implications

The authors offer implications for managers, labor unionists and market participants.

Originality/value

This paper examines the relationship between CSR disclosures and organized labor, an important internal stakeholder, whose institutional role in dynamically advancing employee interests creates opportunities and challenges for strategic management and firm sustainability.

Details

Sustainability Accounting, Management and Policy Journal, vol. 12 no. 2
Type: Research Article
ISSN: 2040-8021

Keywords

To view the access options for this content please click here
Article
Publication date: 2 March 2020

Suzanne M. Ogilby, Xinmei Xie, Yan Xiong and Jin Zhang

Recent literature suggests that sin firms (firms in tobacco, gambling and alcohol industries) have lower institutional ownership, fewer analysts following, higher abnormal…

Abstract

Purpose

Recent literature suggests that sin firms (firms in tobacco, gambling and alcohol industries) have lower institutional ownership, fewer analysts following, higher abnormal returns and higher financial reporting quality. This study aims to investigate empirically how sin firms engage in real activities manipulation (RAM) to meet earnings benchmarks in comparison to non-sin firms.

Design/methodology/approach

The authors examine two types of RAM, namely, Cutting discretionary expenditures including research and development (R&D), SG&A and advertising to boost earnings. Extending deep discount or lenient credit terms to boost sales and/or overproducing to decrease COGS to increase gross profit. Consistent with Roychowdhury (2006), the authors use abnormal discretionary expenditures as the proxy for expenditure reduction manipulation and abnormal production costs as the proxy for COGS manipulation.

Findings

The results for the abnormal discretionary expense model suggest that sin firms do not engage in RAM of advertising, R&D, SG&A expense to just meet earnings benchmarks. The results for the production costs model suggest that sin firms do not engage in COGS manipulation to just meet earnings benchmarks. The results are robust after controlling accrual-based earnings management (AEM). Overall, in this setting, these results suggest that managers of sin firms engage less in RAM to meet earnings benchmarks.

Originality/value

The findings are of interest to investors, auditors, regulators and academics with respect to financial statement analysis and earnings quality.

Details

International Journal of Accounting & Information Management, vol. 28 no. 3
Type: Research Article
ISSN: 1834-7649

Keywords

1 – 10 of over 6000