:In this article, we carefully examine two important implementation issues when estimating propensity scores using generalized boosted models, a promising machine learning technique. First, we examine which of the following methods for tuning GBM lead to better covariate balance and inferences about causal effects: pursuing covariate balance between the treatment groups or tuning the propensity score model on the basis of a model fit criterion. Second, we examine how well GBM can handle irrelevant covariates that are (...) included in the estimation model. We find that chasing balance rather than model fit when estimating propensity scores yielded better covariate balance and more accurate treatment effect estimates. Additionally, we find that adding irrelevant covariates to GBM increased imbalance and bias in the treatment effects. The findings from this paper have useful implications for other work focused on improving methods for estimating propensity scores. (shrink)

Propensity score weighting is a tool for causal inference to adjust for measured confounders in observational studies. In practice, data often present complex structures, such as clustering, which make propensity score modeling and estimation challenging. In addition, for clustered data, there may be unmeasured cluster-level covariates that are related to both the treatment assignment and outcome. When such unmeasured cluster-specific confounders exist and are omitted in the propensity score model, the subsequent propensity (...) class='Hi'>score adjustment may be biased. In this article, we propose a calibration technique for propensity score estimation under the latent ignorable treatment assignment mechanism, i. e., the treatment-outcome relationship is unconfounded given the observed covariates and the latent cluster-specific confounders. We impose novel balance constraints which imply exact balance of the observed confounders and the unobserved cluster-level confounders between the treatment groups. We show that the proposed calibrated propensity score weighting estimator is doubly robust in that it is consistent for the average treatment effect if either the propensity score model is correctly specified or the outcome follows a linear mixed effects model. Moreover, the proposed weighting method can be combined with sampling weights for an integrated solution to handle confounding and sampling designs for causal inference with clustered survey data. In simulation studies, we show that the proposed estimator is superior to other competitors. We estimate the effect of School Body Mass Index Screening on prevalence of overweight and obesity for elementary schools in Pennsylvania. (shrink)

Corporate social performance (CSP) has become a widely applied concept, discussed in most large firms’ corporate reports and the academic literature alike. Unfortunately, CSP has largely been employed as a way of demonstrating corporate social responsibility (CSR) in practice, or to justify the business case for CSR in academia by relating some measure of CSP to some measure of financial performance. In this article, we discuss multiple shortcomings to these approaches. We argue that (1) CSR activities need to be managed (...) and measured as projects and aggregated to the business or corporate level using a project portfolio; (2) appropriate measures need to be identified that move away from reporting the firm’s activities toward quantifying actual social outcomes achieved; and (3) given the types of projects prevalent in CSR, statistical evaluation methods common in other fields (ideally, pre-test post-test control group designs, such as used in medicine or propensity score matching for ongoing or past projects) should be employed to properly measure outcomes. We make a first, albeit imperfect, attempt at using such an approach with data collected on behalf of the Patrimonio Hoy project, a well-publicized CSR initiative carried out by Cemex in Mexico. We show that the results from this data reinforce concerns voiced earlier in this article. (shrink)

This study investigates the relation between CEO compensation and corporate fraud in China. We document a significantly negative correlation between CEO compensation and corporate fraud using data on publicly traded firms between 2005 and 2010. Our findings are consistent with the hypothesis that firms penalize CEOs for fraud by lowering their pay. We also find that CEO compensation is lower in firms that commit more severe frauds. Panel data fixed effects and propensity score methods are used to (...) demonstrate these effects. Our results also indicate that corporate governance mechanisms influence the magnitude of punishment. We find that CEOs of privately controlled firms, firms that split the posts of CEO and chairman, and CEOs of firms located in developed regions suffer larger compensation penalties for committing financial fraud. Finally, we show that CEOs at firms that commit fraud are more likely to be replaced compared to those at non-fraud firms. (shrink)

Corrupt regulatory environment encourages firms to deploy middlemen for speedy and assured acquisition of different services from regulatory agencies. Using a World Bank dataset of 2210 Indian manufacturing firms, this article examines how firms with middlemen deal with corrupt governmental agencies for its operational efficiency. Our results demonstrate that deployment of middlemen by the firms is often accompanied by a substantial increase in operational delay, relatively trigger more consumption of senior management’s time on regulatory disentanglement, enhance the likelihood/tendency to pay (...) bribe, and likely to face more court cases as a means of restitution of legal rights. As firm-specific attributes may contaminate our preliminary results, we utilized the propensity score framework to examine relationships among variables of interests. Our study contributes to the inconspicuous part of the corruption literature by attempting to present a comprehensive but indirect assessment of the functions of middlemen that predominantly remained unattended except some scattered descriptive, case-based anecdotal presentations. (shrink)

Continuum of care throughout pregnancy, delivery and post-delivery has proved to be a critical health intervention for improving the health of mothers and their newborn children. Using data from the fourth wave of the National Family Health Survey conducted in 2015–16, this study examined the correlates of utilization of maternal health care services and child immunization following the continuum of care approach in India. The study also assessed whether the continuity in utilizing maternal health care services affects the immunization of (...) children. A total of 33,422 survey women aged 15–49 were included in the analysis of maternal health care indicators, and 8246 children aged 12–23 months for the analysis of child immunization. The results indicated that about 19% of the women had completed the maternal health continuum, i.e. received full antenatal care, had an institutional delivery and received postnatal care. Women with a higher level of education and of higher economic status were more likely to have complete continuum of care. Continuity of maternal health care was found to be associated with an increase in the immunization level of children. It was observed that 76% of the children whose mothers had complete continuum of care were fully immunized. Furthermore, the results from propensity score matching revealed that if mothers received continuum of care, the chance of their child being fully immunized increased by 17 percentage points. The results suggest that promotion of the continuum of maternal health care approach could help reduce not only the burden of maternal deaths in India, but also that of child deaths by increasing the immunization level of children. (shrink)

In their recent book, Is Inequality Bad for Our Health?, Daniels, Kennedy, and Kawachi claim that to “act justly in health policy, we must have knowledge about the causal pathways through which socioeconomic (and other) inequalities work to produce differential health outcomes.” One of the central problems with this approach is its dependency on “knowledge about the causal pathways.” A widely held belief is that the randomized clinical trial (RCT) is, and ought to be the “gold standard” of evaluating the (...) causal efficacy of interventions. However, often the only data available are non-experimental, observational data. For such data, the necessary randomization is missing. Because the randomization is missing, it seems to follow that it is not possible to make epistemically warranted claims about the causal pathways. Although we are not sanguine about the difficulty in using observational data to make warranted causal claims, we are not as pessimistic as those who believe that the only warranted causal claims are claims based on data from (idealized) RCTs. We argue that careful, thoughtful study design, informed by expert knowledge, that incorporates propensity score matching methods in conjunction with instrumental variable analyses, provides the possibility of warranted causal claims using observational data. (shrink)

The role of competitive funds as a source of funding for academic research has increased in many countries. For the individual researcher, the receipt of a grant can influence both scientific production and career paths. This paper focuses on the importance of the receipt of a research grant for researchers’ academic career paths utilizing a mixed methods approach that combines econometric analysis with in-depth qualitative interviews. The analysis has novel elements both in terms of its subject (impact of funding (...) grants on individuals’ academic career paths) and approach. The results of this study indicate that while research grants have a positive impact on the research performed under the grant itself, there are very important secondary effects on research performance through positive effects on academic career advancement. The probability of obtaining a full professorship for grant recipients is almost double that for rejected applicants, 16 percent compared to 9 percent. The probability for career advancement in general is about 9 percentage points higher for grant recipients. Qualitative interviews support these quantitative results by providing insights into how grants impact research careers, through heightened status, recognition, networking and other factors. (shrink)

OBJECTIVE: Following two randomized controlled trials that demonstrated reduced mortality and better neurological outcome in cardiac arrest patients, mild therapeutic hypothermia was implemented in many intensive care units. Up to now, no large observational studies have confirmed the beneficial effects of mild therapeutic hypothermia. DESIGN: Internet-based survey combined with a retrospective, observational study. PATIENTS: All patients admitted to an intensive care unit in The Netherlands after cardiac arrest from January 1, 1999 until January 1, 2009. DATA SOURCE: Dutch National Intensive (...) Care Evaluation database. METHODS: The moment of implementation of mild therapeutic hypothermia for each hospital participating in the Dutch National Intensive Care Evaluation database was determined with an Internet survey. To compare mortality before and after implementation of mild therapeutic hypothermia, the odds ratio adjusted for Simplified Acute Physiology Score II score, age, gender, propensity score, and in- or out-of-hospital cardiac arrest was calculated. Patients were excluded if 1) they were admitted to an intensive care unit that did not respond to the survey, 2) they were admitted within 3 months after implementation of mild therapeutic hypothermia, 3) they had a Glasgow Coma Scale score of >8, or 4) they did not satisfy the Simplified Acute Physiology Score II inclusion criteria. INTERVENTIONS: None. MEASUREMENTS AND MAIN RESULTS: A total of 13,962 patients were admitted to an intensive care unit following cardiac arrest. In total 8,645 patients were excluded, 5,544 because of a Glasgow Coma Scale score of >8. Of the resultant 5,317 patients, 1,547 patients were treated before and 3,770 patients after implementation of mild therapeutic hypothermia. Patients admitted after implementation of mild therapeutic hypothermia had lower minimal and maximal temperatures (p < .0001) during the first 24 hrs on the intensive care unit compared to patients admitted before implementation of mild therapeutic hypothermia. The adjusted odds ratio of the hospital mortality of patients treated after implementation of mild therapeutic hypothermia was 0.80 (95% confidence interval of 0.65-0.98, p = .029). CONCLUSION: The results of this retrospective, observational survey suggest that implementation of mild therapeutic hypothermia in Dutch intensive care units is associated with a 20% relative reduction of hospital mortality in cardiac arrest patients. (shrink)

This study examines the relationship between cognitive moral development (CMD), productivity features of information technology (IT) and unethical behavior or misconduct. Using an experimental design that randomly assigns subjects to one of four unique technology conditions, we assess the relationship between a subjects' predominant level of CMD and ethical misconduct on IT-oriented work tasks. Our results show that both higher levels of CMD and increased levels of IT productivity features at one's disposal have a significant role to play in explaining (...) observed behavior in our sample. We find that CMD as measured by the Defining Issues Test's P-score is negatively related to task misconduct. Conversely, IT productivity features such as copy-and-paste are positively related to task misconduct. In addition, the CMD—misconduct relationship is significantly diminished by the introduction of IT productivity features. Lastly, a series of hazard analyses are conducted to explore the boundaries of our principal findings. These results demonstrate the significant role of technology in enabling negative behavior and the relative inability of subjects' use of principled moral reasoning to overcome it. Implications of these findings for academics and business managers are offered, as well as recommendations for mitigating misconduct in both academic and workplace environments. (shrink)

This collection of essays by Robert Brandon spans two decades and most of the important problems in the philosophy of biology. Four of his five most important contributions to the philosophy of biology can be found here: the concept of relative adaptedness and its role in the propensity interpretation of fitness; the principle of natural selection; the use of the screening-off relation in defense of organismic selection; and the distinction between units of selection and levels of selection. The fifth (...) major contribution, an analysis of the concept of "environment," mentioned briefly in an essay on the co-evolution of organisms and environment, is given an extended treatment in his 1990 book, Adaptation and Environment. (shrink)

We argue that abduction does not work in isolation from other inference mechanisms and illustrate this through an inference scheme designed to evaluate multiple hypotheses. We use game theory to relate the abductive system to actions that produce new information. To enable evaluation of the implications of this approach we have implemented the procedures used to calculate the impact of new information in a computer model. Experiments with this model display a number of features of collective belief-revision leading to consensus-formation, (...) such as the influence of bias and prejudice. The scheme of inferential calculations invokes a Peircian concept of ‘belief’ as the propensity to choose a particular course of action. (shrink)

Background: Nursing students experience ethical conflicts and challenges during their clinical education. These may lead to moral distress and disturb the learning process. Objectives: This study aimed to explore and to evaluate the nursing students’ ethical challenges in the clinical settings in Iran. Research design: This was a mixed-methods study with an exploratory sequential design. Participants and research context: A total of 37 and 120 Iranian nursing students participated in the qualitative and quantitative phases, respectively. Ethical considerations: The ethical (...) committee of Kerman University of Medical Sciences, Iran, approved the protocol of the study. Findings: Three main categories were extracted from qualitative data including Low attention of nurses to the patients’ preferences; Lack of authority; and Inadequate support. A total of 97% of the students had more than one ethical challenge in clinical settings and 48% of them stated that their challenges did not resolve. The total score of perceived ethical challenges was 62.03 ± 9.17, which was moderate. The highest mean score related to the “Low attention of nurses to the patients’ preferences” subscale. Discussion: The finding confirmed most of the existing results of other international researches about the frequency and kinds of baccalaureate nursing students’ ethical challenges. Conclusion: Identifying student ethical challenges helps teachers to manage their clinical learning process better. This study may provide a view for the nurses, clinical educators, and managers toward nursing students’ ethical challenges and their impact on nursing students’ clinical experiences. (shrink)

BackgroundThere is increasing evidence that research misbehaviour is common, especially the minor forms. Previous studies on research misbehaviour primarily focused on biomedical and social sciences, and evidence from natural sciences and humanities is scarce. We investigated what academic researchers in Amsterdam perceived to be detrimental research misbehaviours in their respective disciplinary fields.MethodsWe used an explanatory sequential mixed methods design. First, survey participants from four disciplinary fields rated perceived frequency and impact of research misbehaviours from a list of 60. We (...) then combined these into a top five ranking of most detrimental research misbehaviours at the aggregate level, stratified by disciplinary field. Second, in focus group interviews, participants from each academic rank and disciplinary field were asked to reflect on the most relevant research misbehaviours for their disciplinary field. We used participative ranking methodology inducing participants to obtain consensus on which research misbehaviours are most detrimental.ResultsIn total, 1080 researchers completed the survey and 61 participated in the focus groups. Insufficient supervision consistently ranked highest in the survey regardless of disciplinary field and the focus groups confirmed this. Important themes in the focus groups were insufficient supervision, sloppy science, and sloppy peer review. Biomedical researchers and social science researchers were primarily concerned with sloppy science and insufficient supervision. Natural sciences and humanities researchers discussed sloppy reviewing and theft of ideas by reviewers, a form of plagiarism. Focus group participants further provided examples of particular research misbehaviours they were confronted with and how these impacted their work as a researcher.ConclusionWe found insufficient supervision and various forms of sloppy science to score highly on aggregate detrimental impact throughout all disciplinary fields. Researchers from the natural sciences and humanities also perceived nepotism to be of major impact on the aggregate level. The natural sciences regarded fabrication of data of major impact as well. The focus group interviews helped to understand how researchers interpreted ‘insufficient supervision’. Besides, the focus group participants added insight into sloppy science in practice. Researchers from the natural sciences and humanities added new research misbehaviours concerning their disciplinary fields to the list, such as the stealing of ideas before publication. This improves our understanding of research misbehaviour beyond the social and biomedical fields. (shrink)

Validity is a central principle of assessment relating to the appropriateness of the uses and interpretations of test results. Usually, one of the inferences that we wish to make is that the score reflects the extent of a student?s learning in a given domain. Thus, it is important to establish that the assessment tasks elicit performances that reflect the intended constructs. This research explored the use of three methods for evaluating whether there are threats to validity in relation (...) to the constructs elicited in international A level geography examinations: (a) Rasch analysis; (b) analysis of processes expected and apparent when students answer questions; and (c) qualitative analysis of responses to items identified as potentially problematic. The results provided strong evidence to support validity with regard to the elicitation of constructs although one question part was identified as a threat to validity. Strengths and weaknesses of the methods can be identified. (shrink)

Contested Pile methods are two-phase procedures for the fair allocation of indivisible items to two players. In the Generation Phase, items over which the players’ preferences differ widely enough are allocated. “Contested” items are placed in the Contested Pile, which is then allocated in the Splitting Phase. Each phase can be carried out using several different techniques; we perform a comprehensive analysis of the resulting design variants using a computational model. The properties of fairness and efficiency, generally achieved in (...) the Generation Phase, must be traded off against robustness to manipulation. We find that the recently developed Undercut procedure for the Splitting Phase outperforms alternative methods in both fairness and efficiency. In general, procedures that keep the Contested Pile relatively small and incorporate the Undercut procedure score well in both fairness and efficiency, but are prone to manipulation. (shrink)

We tackle two open questions from Leitgeb and Pettigrew (2010b) regarding what the belief update framework described in that paper mandates as correct responses to two problems. One of them concerns credences in overlapping propositions and is known in the literature as the “simultaneous update problem”. The other is the well known “Judy Benjamin” problem concerning conditional credences. We argue that our results concerning the problems point to deficiencies of the framework. More generally, we observe that the method of minimizing (...) inverse relative entropy seems to work better than (or at least equally well as) its competitors in many situations. (shrink)

Although academic underachievement is a familiar topic in educational research, there is no consensus on how underachievers should be selected. This study aimed to compare different selection methods, absolute split method, simple difference score method, regression method and nomination, in the identification of underachievers from a sample of 126 Chinese Grade 7 students. The results indicated that the three different statistical methods showed high congruence in selecting underachievers, but nomination selected a different group of underachievers. It was (...) suggested that, depending on research or intervention purposes, information from statistical methods and nomination might combine to provide a more comprehensive identification procedure. (shrink)

From one of America’s most celebrated educators, an inspiring guide to transforming every child’s education In a Los Angeles neighborhood plagued by guns, gangs, and drugs, there is an exceptional classroom known as Room 56. The fifth graders inside are first-generation immigrants who live in poverty and speak English as a second language. They also play Vivaldi, perform Shakespeare, score in the top 1 percent on standardized tests, and go on to attend Ivy League universities. Rafe Esquith is the (...) teacher responsible for these accomplishments. From the man whom The New York Times calls “a genius and a saint” comes a revelatory program for educating today’s youth. In Teach Like Your Hair’s on Fire! , Rafe Esquith reveals the techniques that have made him one of the most acclaimed educators of our time. The two mottoes in Esquith’s classroom are “Be Nice, Work Hard,” and “There Are No Shortcuts.” His students voluntarily come to school at 6:30 in the morning and work until 5:00 in the afternoon. They learn to handle money responsibly, tackle algebra, and travel the country to study history. They pair Hamlet with rock and roll, and read the American classics. Teach Like Your Hair’s on Fire! is a brilliant and inspiring road map for parents, teachers, and anyone who cares about the future success of our nation’s children. BACKCOVER: Praise for Rafe Esquith: “Rafe Esquith is my only hero.” —Sir Ian McKellan “Politicians, burbling over how to educate the underclass, would do well to stop by Rafe Esquith’s fifth grade class as it mounts its annual Shakespeare play. Sound like a grind? Listen to the peals of laughter bouncing off the classroom walls.” —Time “Esquith is a modern-day Thoreau, preaching the value of good work, honest self-reflection, and the courage to go one’s own way.” —Newsday. (shrink)

The question of whether females tend to act more ethically or risk-averse compared to males is an interesting ethical puzzle. Using a large sample of US firms over the 1992–2014 period, we investigate the effect that the gender of a chief executive officer has on earnings management using classification shifting. We find that the pre-Sarbanes–Oxley Act period was characterized by high levels of classification shifting by both female and male CEOs, but the magnitude of such practices is, surprisingly, significantly higher (...) in firms with female CEOs than in those with male CEOs. By contrast, our results suggest that following the passage of the punitive SOX Act, classification shifting by female CEOs declined significantly, whilst it remained pervasive in firms with male CEOs. This suggests that the observable differences in financial reporting behavior between male and female CEOs seem to be because female CEOs are more risk-averse, but not necessarily more ethically sensitive than their male counterparts are. The central tenets of our findings remain unchanged after several additional checks, including controlling for alternative earnings management techniques, corporate governance mechanisms, CEO and chief financial officer characteristics and propensity score-matching. (shrink)

We evaluate the relationship between the appointment of women to CEO or Chair positions and firm performance, and shed light on the differences between family and nonfamily firms. By using a propensity score matching approach on a sample of 394 French firms over the period 2001–2010, we find major discordances between women’s leadership style and family business expectations relative to firm performance, as measured by return on assets and Tobin’s q. Notably, our results support the conjecture that family (...) firms, which are more conducive to transformational leadership, offer women a more appropriate climate for exercising the function of Chair than that of CEO. In contrast, women CEOs perform better in nonfamily firms. Our findings move away from the predominant focus on barriers and stereotypes images about the female leadership and support the contingency theory of leadership, which states that the effectiveness of a leadership style depends on the organization and culture in which leaders operate, and on task-related positions. (shrink)

We draw from upper echelons theory to investigate whether the presence of a chief sustainability officer is associated with better corporate environmental performance in highly polluting industries. Such firms are under strong pressure to remediate environmental damage, to comply with regulations, and to even exceed environmental standards. CSOs in these firms are likely to be hired as legitimate agents to lead and successfully implement environmental strategy aimed at reducing pollution levels. Interestingly and contrary to our expectations, we found that the (...) presence of a CSO is associated with higher levels of pollution emissions. Nonetheless, we found that the CSO has a positive influence on a firm’s environmental performance if faced with strict environmental regulations. We argue that the enforcement of environmental regulations enhances monitoring and accountability of pollution emissions. The sample for this study comprised all the S&P 500 firms required by the Environmental Protection Agency to annually report their toxic emissions to the Toxic Release Inventory. Data were collected for a 6-year period from 2006 to 2011. We used a panel data regression and employed propensity score matching to correct for potential endogeneity problems. (shrink)

In this article, we propose that giving in cash and non-cash differ in their relation with the giving firm’s future corporate financial performance and only cash giving is associated with future CFP. Using a novel dataset from ASSET4 that differentiates corporate giving over a sample period of 2002–2012, we examine three competing hypotheses: agency cost hypothesis that cash giving reflects agency cost and destroys value for shareholders, investment hypothesis that cash giving is an investment by management that aims for better (...) future return, and information hypothesis that cash giving has informational value to shareholders as cash is a critical resource at a firm and giving is a decision by managers who are insiders. We find that indeed, only cash giving is positively associated with future CFP and firm value, measured by Fama–French five-factor abnormal risk-adjusted stock returns, future return on assets, and Tobin’s Q. In addition, we find that the positive association exists only between excess, i.e., unexpected, but not expected cash giving and future CFP. Our empirical findings support the information hypothesis, but neither the agency hypothesis nor the investment hypothesis, and are robust to a number of endogeneity tests, including orthogonalized cash giving, instrumental variable regression using geography-based instruments, and propensity score matching. Furthermore, we show that the positive association between future CFP and unexpected cash giving is only pronounced at firms with good governance and relatively higher sales growth where agency problems are less likely, and at firms with no alternative mechanisms to demonstrate the strength of cash flow. Additionally, we do not find evidence that suggests in-kind giving to possess any informational value. (shrink)

Does environmental management help foreign firms outperform local firms in emerging economies? While existing research suggests that environmental management may or may not benefit firm performance, the question is particularly under-investigated in the emerging economy context. Using the data on foreign investment into China, this study explores whether foreign firms that are under greater environmental pressure, at home or at the host, outperform comparable local firms in an emerging host country. In making this comparison, we use propensity-score matching (...) and a difference-in-differences approach to handle the problem of endogeneity inherent in comparing the performances of foreign versus local firms. We find empirical support that foreign firms perform better than local firms when they are under high environmental pressure in the emerging host country, and this result is driven by the foreign firms originating from countries with high environmental pressure. (shrink)

This study examines the influence of auditor-CEO surname sharing on financial misstatement and further investigates whether the above effect depends on hometown relationship and the rarity of surnames, respectively. Using hand-collected data from China, the findings show that ACSS is significantly positively related to financial misstatement, suggesting that the auditor-CEO ancestry membership elicits the collusion and increases the likelihood of financial misstatement. Moreover, ACSS based upon hometown relationship leads to significantly higher likelihood of financial misstatement, compared with ACSS without hometown (...) relationship. Furthermore, the positive relation between ACSS and financial misstatement is more pronounced for rare surnames than for common surnames. The above findings are robust to sensitivity tests on the basis of different measures of ACSS and financial misstatement, and my conclusions are still valid after using the propensity score matching approach to address the endogeneity concerns. (shrink)

This study investigates how managers in firms that have committed fraud strategically use socially responsible activities in coordination with their fraudulent financial reporting practices. Using propensity score matching to select control firms that have a similar probability of fraud in the pre-fraud benchmark period, we find that the corporate social responsibility performance of fraudulent firms in the fraud-committing period is significantly higher compared with the CSR performance of non-fraudulent control firms during this period, and compared with that during (...) their own pre-fraud benchmark periods. This higher CSR performance by fraudulent firms is achieved by means of investing in both stakeholder and third-party CSR categories and by improving in CSR strengths. Furthermore, the increase in CSR performance is more pronounced for fraudulent firms with a weak governance environment, and for firms located in high-religiosity states. Overall, our findings suggest that fraudulent firms strategically adjust their CSR performance to coordinate with their fraudulent financial activities. (shrink)

This study investigates how managers in firms that have committed fraud strategically use socially responsible activities in coordination with their fraudulent financial reporting practices. Using propensity score matching to select control firms that have a similar probability of fraud in the pre-fraud benchmark period, we find that the corporate social responsibility performance of fraudulent firms in the fraud-committing period is significantly higher compared with the CSR performance of non-fraudulent control firms during this period, and compared with that during (...) their own pre-fraud benchmark periods. This higher CSR performance by fraudulent firms is achieved by means of investing in both stakeholder and third-party CSR categories and by improving in CSR strengths. Furthermore, the increase in CSR performance is more pronounced for fraudulent firms with a weak governance environment, and for firms located in high-religiosity states. Overall, our findings suggest that fraudulent firms strategically adjust their CSR performance to coordinate with their fraudulent financial activities. (shrink)

We investigate whether air pollution harms business ethics from the perspective of earnings manipulation, which exerts a real effect on the economy and social welfare. Using a large sample and a comprehensive air quality index in China, we find that firms located in cities with more severe air pollution exhibit higher levels of discretionary accruals and are more likely to restate their financial statements, consistent with exposure to air pollution leading to more earnings manipulation. We further provide causal evidence using (...) propensity score matching and a discontinuity regression design exploiting the Qinling Mountain–Huai River Heating Policy Line, which exogenously leads to more air pollution to cities located immediately north of the Line but not those in the south. Our findings are robust to controlling for weather conditions and alternative samples and measures of air pollution and earnings manipulation. Overall, this study unveils how the ecological environment shapes business ethics. (shrink)

In this paper we present a continuous extension for longitudinal analysis settings of the recently proposed Covariate Balancing Propensity Score methodology. While extensions of the CBPS methodology to both marginal structural models and general treatment regimes have been proposed, these extensions have been kept separately. We propose to bring them together using the generalized method of moments to estimate inverse probability weights such that after weighting the association between time-varying covariates and the treatment is minimized. A simulation analysis (...) confirms the correlation-breaking performance of the proposed technique. As an empirical application we look at the impact the gradual roll-out of Seguro Popular, a universal health insurance program, has had on the resources available for the provision of healthcare services in Mexico. (shrink)

This paper examines the relationship between loan guarantees and audit fees as well as the moderating effect of corporate social responsibility. We find that guaranteeing another entity’s debt significantly increases firms’ own audit fees. However, the disclosure of CSR information attenuates the fee-increasing effects of loan guarantees. A closer examination reveals that the role of CSR is attributable to the information effect rather than the signal effect. Our results are robust to the use of a quasi-natural experiment, a propensity (...) score matching analysis, a Heckman two-stage treatment effect model and alternative proxies. This work makes new contributions to the current understanding of the consequences of loan guarantees, determinants of audit fees and value of CSR disclosure. (shrink)

This paper examines whether firms strategically legitimize large labor dismissals by performing ex-ante downward earnings management. We further assess whether the effect is larger under stakeholder pressure and whether these practices influence the external perception of firms’ behavior. As laying off employees without an economic reason is perceived as a breach of the social contract, stakeholders pressure firms to provide economic justification for LLDs. We argue that firms strategically legitimize LLDs by artificially worsening their financial performance through downward earnings management. (...) From a sample of European listed firms for the period 1998–2014, using a propensity score matching model to control for differences in observable characteristics between LLD and non-LLD firms, we find that firms manage their earnings downward in the year prior to LLDs. These results are more pronounced in the presence of high stakeholder pressure. As such, firms with stronger trade unions, higher visibility, stricter employment protection legislation, and more stakeholder-oriented legal environments have stronger incentives to manage earnings downward before LLDs. Finally, we document that downward earnings management prior to LLDs is effective at legitimizing LLDs, offsetting the negative external perceptions of firms in the aftermath of LLDs. This study contributes to the business ethics literature by identifying unintended consequences of stakeholder pressure around LLDs. It also brings important empirical insights into how ethically questionable decisions are strategically legitimized through further unethical practices. (shrink)

We investigate the effect of Lesbian, Gay, Bisexual, and Transgender -supportive corporate policies on credit ratings. To the extent that LGBT-friendly policies are beneficial to the firm and therefore improve its expected cash flows, credit rating agencies should assign more favorable credit ratings to the firm. To alleviate endogeneity concerns, we exploit the variations in the LGBT populations across the states in the U.S. as our instrument. Our instrumental-variable analysis reveals that firms that adopt LGBT-supportive corporate policies enjoy better credit (...) ratings, supporting the stakeholder and good management hypothesis. Further analysis using propensity score matching also yields consistent results. (shrink)